The men were working to change a tyre on a tractor at a farm at Monellan, Crossroads, when the tractor tyre exploded.
The explosion hit the men and they both died at the scene.
The men – both aged 52 – were lifelong friends. One was from Cloughfinn, the other from Crossroads, Raphoe.
Relatives and friends of the men rushed to the scene of the accident.
Emergencies services also attended the scene, with the area now cordoned off by Gardai.
The Health and Safety Authority is expected to send officials to the scene in the morning.
The deaths have caused widespread anguish amongst the close-knit community. The dead men were popular locally.
“It appears to be an horrific freak accident,” said one local man this evening.
“Our thoughts and prayers are with the families of the men who died.”