The alleged car thief ran from the crash scene on the Hume Highway in southwest Sydney on Saturday morning but was arrested nearby, police said.
Police said emergency services were called to a service station in South Hurstville at 10.20am following reports of a vehicle theft.
Police were told a 25-year-old man was allegedly assaulted by an unknown man who stole his red sedan and left the scene.
Highway patrol officers spotted the vehicle a short time later on King Georges Rd, Beverly Hills, and began pursuing it when the driver failed to stop.
Assisted by the NSW Police air wing, police continued their pursuit along the M5 Motorway before it was terminated in the Bankstown area.
A police helicopter continued to track the car before it crashed into an Alfa Romeo sedan on the Old Hume Highway in Camden South about 11.10am.
The two occupants of the Alfa Romeo were treated by police and paramedics but died at the scene.
They are yet to be formally identified.
A 31-year-old man was arrested and underwent mandatory testing at Campbelltown Hospital before being taken to Campbelltown Police Station.
A critical incident team will lead investigations into the circumstances surrounding the crash.
The investigation will be reviewed by the Professional Standards Command and overseen by the Law Enforcement Conduct Commission.
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