A road closure and traffic diversions are now in place between Cathedral Square Park and the traffic lights at the British War Memorial Steps.
The family of the deceased male, 18, have been notified of his death and a police liaison officer is currently supporting the family.
A second male in the car suffered serious injuries and remains in a critical condition. He is being transferred to medical facilities in Spain for further treatment.
A third male travelling in the car is being treated for shock at Saint Bernards Hospital.

Gibraltar Fire and Rescue Services, the Gibraltar Ambulance Service and the Gibraltar Defence Police were also deployed to the Road Traffic Collision, which was declared a major incident by the RGP.
RGP officers from the Crime Division, Crime Scene Investigation Team, Response Team and a Road Traffic Collision Investigator are currently investigating the circumstances which led to the RTC.
HM Coroner has been informed.
The road closure and traffic diversions are likely to remain in place for several hours.
An RGP spokesman said: “If anyone witnessed the incident, we would ask them to contact us on 200 72500 or online via www.police.gi/report-online
“We respectfully ask that members of the public avoid the area, whilst officers deal with this tragic accident.”

22-07-23 PANORAMAdailyGIBRALTAR