The crash happened at 06:45 local time in Clonkillymore, Termon. The driver of the car, who was in his 20s, was pronounced dead at the scene.
A passenger in the car, another man in his 20s, was taken to hospital. His injuries are not thought to be life threatening.
The road has been closed as forensic officers examine the scene.
A man has died following a single vehicle crash in County Donegal, Irish police have said.