The twisted wreckage of hatchback and a four-wheel-drive lay in a paddock at the intersection of Green Island Bush Rd, Tunnel Beach Rd and Blackhead Rd after the crash about 6.15pm yesterday.
The deceased both had to be cut from the hatchback, police said.
The driver of the four-wheel-drive sustained minor injuries and was treated at the scene.
It appeared the four-wheel-drive had T-boned the hatchback, propelling both cars through a fence and into the paddock.
Extensive scene cordons were set up. Roads were closed to all traffic apart from residents returning home.
It is the second serious crash in the Dunedin area in as many days after a truck crossed the centre line and collided with a car at East Taieri on Thursday.
Police said specialist staff including a Southern district serious crash investigator attended yesterday's crash.
Senior Sergeant Craig Brown said preliminary scene investigations were completed last night and roads were reopened shortly before 11pm.
The driver of the four-wheel-drive and an independent witness assisted police with their inquiries, he said.
Police inquiries are continuing.
Concern about the safety of the stretch of road has been raised in the past.
Two people were taken to hospital after a two-vehicle collision at the same intersection in 2013.
• The two victims of a crash at East Taieri on Thursday are stable.
The driver of the vehicle, which was struck by a truck which allegedly crossed the centre line on State Highway 1, sustained abdominal injuries.
The passenger broke his sternum and had chest injuries, police said.
No charges had yet been laid.