A silver Jaguar and blue Ford Focus collided head-on at the bottom of the hill near Huttons Ambo on the A64 west of Malton.
One of the drivers, a man in his thirties, was arrested at the scene on suspicion of drink driving.
The A64 is closed from just north of York to the Malton by-pass and police are not expecting to reopen it until midday.
They are urging motorists to avoid the area. Diversions are in place.
The crash happened minutes before midnight.
Firefighters from Malton and Pickering had to cut both drivers out of their vehicles. The Yorkshire Air Ambulance and Yorkshire Ambulance Service attended and both drivers were taken to hospital
North Yorkshire Police are appealing for witnesses who saw the collision or either vehicle before the crash.
Witnesses or anyone with information that may help the investigation should contact officers by emailing Joseph.schramm@Northyorkshire.police.uk or ringing 101, selecting option 2, and asking for TC694 Joseph Schramm. Please quote the North Yorkshire Police reference number 12240011595.
