Police said the men aged 28, 23, and 22, and a 17-year-old boy, all from the region, were travelling along the Riddoch Highway about 3:00am when their car rolled 50 metres north of the Penola bypass.
Senior constable Kylee Simpson said all four died at the scene.
"Major crash officers are attending the scene and they'll obviously try to piece together what's happened," she said.
"We believe they were all from the south-east, it's such a tight-knit community and to have four young lives lost it's obviously going to take its toll on the community."
All four crash victims were reportedly forestry workers on their way to work.
Their car was towing a trailer at the time of the accident.
Country Fire Service Wattle Range Group Officer, Fred Stent, said one of the passengers was alive when crews arrived at the scene.
"One of the ambulance service was here, they did the first aid on him first up," he said.
"Then we got our gear ready to help cut him out of the vehicle, but unfortunately when we got him out of the vehicle he passed away."
Mr Stent described the accident as the worst the community had seen for some time.
The highway was closed for several hours but has been re-opened.
Small community reeling
The small town of Penola has a population of about 1,400 and is located four hours south-east of Adelaide.
One resident said the entire community was in shock.
"It's just devastating," she said.
One shop owner said there was a very sombre feeling in the town.
"Everyone's quite low, feels very touched being in the community," she said.
"I mean any time is horrific but a lot of people have mentioned because it's so close to Christmas, for the families.
"Also just feeling for the CFS, ambulance, police, everyone that's got to deal with the scene out there as well."
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