At least 15 vehicles were burning after the attack on the convoy, which the United Nations said was made up of 4 buses and 21 civilian vehicles.
The attack took place in Pec at about 3 P.M. as the convoy headed from Orahovac to Montenegro, Serbia's smaller partner in the Yugoslavia federation.
Witnesses who saw the convoy leaving Orahovac said most of those in it were women and children.
A United Nations official said 117 of the refugees were evacuated to Montenegro while 35 were taking refuge at a police barracks in Pec.
"It's obviously an appalling incident," said Peter Kessler, spokesman for the United Nations High Commissioner for Refugees, which organized the convoy in cooperation with the NATO-led peacekeeping force.
Kessler said the attack began after most of the convoy had passed through Pec and apparently was focused on the civilian cars. "We think they stopped the cars and pulled people out of the vehicles," he said. "This is the most serious incident we've had to date."
The convoy was organized to take the Serbs, who have been holed up in a protected enclave in Orahovac for months, to the neighboring Yugoslav republic.
Ethnic Albanians have said that among the Serbs in Orahovac were people known to have committed atrocities against ethnic Albanians during the guerrilla war against Serbian rule and during the NATO bombing campaign of Yugoslavia earlier this year.
Kessler said there was no suggestion that any such persons were among the refugee convoy. "There was no one on the convoy who we believed was subject to any allegations," he said.
Information about the attack was sketchy, but Kessler said the convoy, which had been due to leave Orahovac at about 6 A.M., had not left until shortly before noon, delayed in part by Serbs who decided to ride with the convoy in civilian vehicles.
There was no immediate word on whether anyone involved in the attack had been arrested.