BASS Coast Highway Patrol is investigating a fatal two-vehicle collision in Nyora this morning.

It is believed a male driver in a Holden sedan was travelling along the South Gippsland Highway when they collided head-on with a silver Mazda hatchback at the intersection of Nyora-St Helier Road about 5.20am.

The driver of the sedan, who is yet to be formally identified, died at the scene.

The driver of the hatchback, a Poowong man in his 30s sustained serious injuries and was airlifted to hospital for treatment.

The exact cause of the collision is yet to be determined and investigations remain ongoing.

Witnesses in a separate vehicle who were at the scene are assisting police with their enquires.

Brad Steer, Senior Sergeant for South Gippsland Police spoke to the Sentinel Times. 

"This morning at about 5:20am two vehicles were travelling along the South Gippsland Highway in Nyora when unfortunately, both those vehicles have had a head on collision and unfortunately one of the drivers of those vehicles is now deceased."

"At this point in time we know that there were three people involved, one of those is unfortunately, deceased. Bass Coast Highway Patrol is making some enquiries at the moment to identify that person. The driver of the other vehicle has been airlifted to hospital with serious injuries to the abdomen and the other party is assisting police with their enquiries."

The other party was a passenger in the deceased's vehicle, according to Senior Sergeant Steer. 

"We suspect the highway will be closed for at least another two to three hours."

Anyone who witnessed the incident or has information is urged to contact the Wonthaggi Police Station, Crime Stoppers on 1800 333 000 or submit a confidential report online at www.crimestoppersvic.com.au