The boys, believed to be aged four and 18 months, were in the Toyota Camry sedan their parents were driving when it hit a tree at 10am.
The Waroona couple, both aged 27, had been travelling north along Vasse Highway when they failed to negotiate a left-hand bend 15 kilometres from Nannup, police spokesman Samuel Dinnison said.
The car hit the gravel embankment and skidded across both lanes of traffic, hitting the tree opposite.
The parents died at the scene and it took Fire and Emergency Services an hour to free the boys, who were trapped inside.
Both children were rushed by St John Ambulance to Bunbury Hospital. The 18-month-old suffered more serious injuries than his brother, who suffered only minor scratches.
The children's next of kin have been notified.
Shire of Waroona President Mike Walmsley said it was tragic loss to the community.
"The sad fact is two young kids have lost their parents, that's the real tragedy...," he said.
"This will affect a lot of people seeing as they were a young couple with young kids. It is just one of those horrible things.
"Our hearts go out to them and the family. Being a small community we will rally behind them as best we can."