The unnamed 14-year-old fell from the Sky Ride at Six Flags Amusement Park in Lake George, New York state.
The girl, from Delaware, was in one of the ride’s two-person cars with her younger brother.
A video clip of the episode, captured on a mobile phone by a bystander, shows the youngster dangling from the ride while it is still in motion.
“Oh my God, she is in for it,” one onlooker can be heard saying.
“You should be right underneath to catch her,” advises a woman to the growing crowd.
The ride is eventually stopped by the operator close to a tree amid screams and people shouting advice to the girl.
“Don’t swing!” onlookers yell to the her as she tries to reach a tree branch with her feet.
“Hold on, don’t let go!” others can be heard saying.
Matthew Howard Sr was leaving the attraction on Saturday evening with his family when he heard the youngster screaming for help and looked up to see her dangling from the cable ride.
Mr Howard, 47, and his 21-year-old daughter, Leeann Winchell, ran over and positioned themselves under the girl as the ride stopped and park security officials came running.
“I said: ‘It’s ‘OK! It’s OK to let go, I’ll catch you, honey,'” said Mr Howard.
The girl lets go and is caught by the pair to cheers and applause.
She was taken to hospital, but is in a stable condition with no serious injuries.
Mr Howard, a contractor from Schenectady, was treated and released for a minor back injury following the rescue.
“I couldn’t let that little girl die,” he said.
“No one wants to put himself underneath a body like that, but I couldn’t stand by and watch.”
His daughter, who is applying to be a nurse, said they visited the girl in hospital on Sunday.
She said the teenager was in good spirits.
They did not know how she had fallen out of the ride.
“I’m just glad we could be there to help,” she said. “We were in the right place at the right time.”
Loren Lent, whose wife and daughter were on the ride, said it had no seatbelts, but did have a bar running across it to keep people in.
The ride was shut for safety checks and has since been cleared for operation, but will remain closed.
The park said: “There does not appear to be any malfunction of the ride, but we have closed the attraction until a thorough review can be completed.
“We are reviewing our internal procedures to ensure the safety and security of our guests and team members.”