A number of vehicles were involved in the crash opposite Burt chapel.
Fire crews from Derry assisted Donegal crews at the scene.
A number of ambulances were also in attendance as several people were hurt.
The accident happened at a junction where there have been several fatalities in the past.
An eye-witness said: “The fire and ambulance crews were at the scene for almost two hours. It looked really bad.
“I hope everyone recovers; it is such a bad junction.”
Gardai remain at the scene of the incident which happened at the junction of the Slab Road and the main Letterkenny/Derry road.