In what was the rally's second fatal crash within 26 hours, police confirmed the driver and co-driver, aged 68 and 59 respectively, were killed on Cygnet's Wattle Grove Road in the state's South on Saturday.

Acting Inspector Sally Cottrell said the crash occurred about 11.40am when the 2019 Porsche 911 GT3 RS - car 902 - lost control in gravel and collided into a tree.

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Emergency services attended the scene, but were unable to revive either of the men.

It comes after the death of 68-year-old New South Wales driver Shane Navin on Friday, killed on the Lyell Highway near Double Barrel Creek.

Targa Australia chief executive Mark Perry said it had been a devastating few days for the Targa family.

"Today our thoughts and deepest condolences go to Leigh and Dennis' family and friends," he said.

"Both loved Targa and we knew them so well, which makes their passing so difficult for everyone in our community.

"They will be sorely missed by us all."

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Premier Peter Gutwein said it was a tragic outcome for all involved within the Targa community and his thoughts were with them during this difficult time.

"I would like to extend my deepest condolences to the family and friends of the three people tragically killed while taking part in the Targa Tasmania race," he said.

"I'm certain that we will sit down with the organisers and we will work through these matters to try and understand exactly what has happened in these very tragic circumstances."

Targa confirmed the stages had been downgraded at 12.17pm to touring only and competitors returned to the finish at PW1 in Hobart.