Police said Karen Sherif, 64, suffered cuts and bruises when a coyote knocked her over while going after her Yorkshire terrier, the Los Angeles Times reported Wednesday.
Sherif said she was walking with the dog when the coyote attacked.
"I just started screaming at the top of my lungs" as the coyote took off with the terrier in its mouth, dragging Sherif into the street by the dog's leash, she said.
She let go of the leash as neighbors rushed from homes to help.
Her dog was found about 100 feet away with a broken neck.
Coyotes have invaded the city's Laguna Woods neighborhood in recent months killing cats and dogs, officials said.
Laguna Beach Police Department Lt. Jason Kravetz said authorities were seeking assistance from neighboring areas in combating the problem.
The city has set traps for the coyotes and warned residents to secure trash cans, avoid leaving food out on their porches and keep their pets inside at night.