It happened between Quigley's Point and Whitecastle at around 03:35 BST on Saturday morning.
GardaÃ­ (Irish police) have said that the five males travelling in the car were all in their late teens.
One of them was pronounced dead at the scene.
A second was taken to Altnagelvin Hospital in Londonderry where he was later pronounced dead.
Three other males, who were also in the vehicle, are understood to be in a stable condition in hospital.
The road has now reopened.
Fr Francis Bradley said the young men were both from Buncrana.
Having spoken to the families of those who died, Fr Bradley said: "It is a terrible loss for them. There is a terrible sense of sadness."
Two young men have died and three others have been injured in a single-car crash in County Donegal.