Emergency services were called to Ashcroft in Sydney's southwest about 10.50am on Monday and found a grey Ford Falcon sedan split in half with a pair of young passengers thrown from the car.
Officers were told the speeding vehicle hit a power pole and a tree on Maxwells Avenue, only a few blocks from a primary school and a childcare centre.
NSW Police Assistant Commissioner Brett McFadden said the car was travelling well above the 50km/h speed limit and "separated in half quite dramatically" after smashing into the pole.
Two boys died at the scene.
They are yet to be formally identified but are both believed to be aged between 10 and 15.
Police have been searching nearby parks for two young males who emerged from the wreck before running off.
"A driver who was responsible for the occupants - of his passengers and a front seat passenger - made a decision to flee the scene," Mr McFadden said.
"When you've caused that much carnage and you don't stick around to take responsibility for it, it's a weakness of character."
The front half of the car ended up next to a jacaranda tree while the boot was strewn in the front yard of a home.
Wreckage from the crash also littered the road, with Mr McFadden describing the scene as one of "absolute destruction".
"Anyone who witnessed that crash would no doubt be traumatised by it," he said.
"Two families are now going to be experiencing the absolute heartache it is to have some lives taken from them, which are clearly avoidable."
Officers with police dogs have been scouring the bushland surrounding Cabramatta Creek at Magee Street and Maxwells Avenue in the hunt for the car's other occupants.
There were no reports of other injuries or vehicles involved, police said.
Detectives are combing through CCTV and dash cam footage in the hope of identifying the driver and other passenger.
Mr McFadden said the car had recently been sold and the registration details were no longer current, making it difficult to identify the owner.
The car had not been reported as stolen.
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