The boy – described by one witness as "this little kid in the driver's seat" – collided with another car and then lost control on a busy roundabout and slammed into a tree.
He was unhurt and fled the scene but was caught by another motorist and handed over to police.
It is believed the primary school pupil took the keys to his foster parents' Suzuki Alto and sped off following a row at home in Northampton.
Passers-by said he narrowly avoided other cars and pedestrians and drove the wrong way up a one-way street before slamming into a tree.
Josh Tompkins, who was driving behind the boy, told the Mirror: "He kept stalling, then I got a glimpse of this little kid in the driver's seat.
"I couldn't believe it. He went up to a roundabout and turned the wrong way down the street.
"Then he just hit the kerb, mounted the pavement and ploughed into this tree and stumbled out.
"I chased after him but I caught up with him pretty easily as he only had little legs.
He was telling me he needed to see his dad. Nobody was injured but he missed pedestrians and other vehicles by milimetres.
Inspector Carl Sturman said: "There seems to have been an argument between the boy and his foster parents and he took their car.
"He hit another vehicle as he was driving off and ended crashing into a bush or a tree.
"There was only minor damage and he wasn't injured. He obviously drove reasonably well to get as far as he did.
"He's certainly one of the youngest drivers I've come across."