The young man was the driver of one of two cars involved in the collision, which occurred at 9.15 last night at Ard Baithin.
A garda spokesperson confirmed the man was taken from the scene to Letterkenny University Hospital, but later passed away at the hospital.
The spokesperson said: “Gardaí are investigating a fatal road traffic collision that occurred in St Johnston, Dundee, Co. Donegal yesterday evening, Thursday 30th December 2021 at approximately 9.15pm.
“The collision involved two cars and occurred on the R236 in St Johnston. The driver of one car, a male aged in his 20s, was seriously injured during the collision. He was taken to Letterkenny University Hospital, where he later passed away.
“The road is currently closed as Garda Forensic Collision Investigators conduct a technical examination of the scene. Local diversions are in place.
“Gardaí are appealing for any witnesses to this collision to come forward. Any road users who were travelling in the area at the time and who may have camera footage (including dash-cam) are asked to make this footage available to Gardaí.
“Anyone with information is asked to contact Letterkenny Garda Station on 074 916 7100, the Garda Confidential Line on 1800 666 111, or any Garda Station.”