The exact circumstances are yet to be determined at this stage.
A witness told Nine News it appeared as though the driver of the allegedly stolen car lost control of the vehicle.
“The blue car was going fast down this way and lost control … hit the other car from the other side and some of the guys tried to run away.”
Two of the four passengers – an 18-year-old Cranbourne woman and a 16-year-old Frankston boy – died at the scene.
A 17-year-old Frankston North girl remains in a critical condition and an 18-year-old Baxter man was treated for minor injuries.
The occupants of the other vehicle – a 39-year-old woman and two girls aged six and nine, all from Lynbrook – are being treated for non-life threatening injuries.
The South Gippsland Highway southbound will remain closed while Major Collision Investigation Unit detectives investigate.
Any witnesses or anyone with dash-cam footage is urged to contact Crime Stoppers on 1800 333 000 or submit a confidential report online.
The incident brings the road toll to 181 lives lost, 61 more than the same time last year.