We designed and tested the effects of an in-car augmented reality system (ARS) on younger and older drivers, with and without a secondary distraction task. When potential danger is detected, the ARS alerts the driver by progressively indicating the time to collision to the lead vehicle as well as merging vehicles from side lanes by an AR display that overlaps with the lead or merging vehicles. We tested the ARS with younger (18-30) and older (65-75) drivers in a high-fidelity driving simulator. Results showed that the ARS could significantly reduce collisions caused by hazard events such as sudden slowing of the lead vehicle or merging of vehicles from sides lanes. Consistent with previous results, older drivers, despite age-related decline in cognitive and motor abilities, could leverage their driving experience to avoid forward collisions with the lead vehicle as much as younger drivers. However, older drivers were poorer in avoiding collisions caused by sudden merging events than younger drivers. The ARS was found to be most useful in helping older adults to avoid collision caused by sudden hazard events, especially with the presence of a distraction task. The ARS was also more effective for older than younger drivers to encourage a safe driving distance with the lead vehicle. Interestingly, there seemed to be differential effects of the ARS on the general driving behavior of younger and older drivers. While older drivers in general became more careful and safer in how they drive with the ARS, younger drivers seemed to rely on the ARS to alert them to potential hazard events without adopting safer driving behavior.