The accident occurred Sunday when a white Ford F-250 allegedly ran a stop sign and hit the Chevrolet Impala carrying the children, the El Paso Times reported.
The driver of the Ford, Alberto Coronado, 23, was being held on five counts of intoxicated manslaughter, said El Paso County Sheriff's Office spokeswoman Angelica Becarra.
At the scene, Emily Mena, who said she was a family member, identified the children as Jasmine Alfarez, 18, Brenda Morales, 11, and DeMarco Morales, 8. Mena said the Morales siblings were her cousins.
The two adults were the children's grandfather and a female passenger -- neither name was reported. The children were from Dallas and were visiting their grandfather in Montana Vista.
Residents of the rural community said the streets where the accident occurred are known for speeding vehicles and accidents.
"There are always accidents on this street," said Cruz Morales. "When my friend called me and told me there was a crash, I knew it was on John Henry and Santiesteban. I can't even count how many accidents there have been there."