Police confirmed the 35-year-old female driver and the two children, from Cheltenham, were killed when the car went up in flames in Parkville.
“Major Collision Investigation Unit detectives are currently on scene following a fatal crash in Parkville this morning,” a police statement read.
“Sadly the female driver, a 35-year-old Cheltenham woman and her two passengers, an eight-year-old Cheltenham girl and a 20-month old Cheltenham boy died at the scene.”
The car was on fire and destroyed when emergency services arrived outside the Royal Melbourne Hospital about 10am.
Police believe the Ford Territory was travelling south along Flemington Road near Grattan Street when it struck the curb, crashing into a pole about 9.50am.
The exact cause of the crash is yet to be determined, but police have ruled out the explosion being a “terrorism incident”.
Firefighters attended the scene to assist police on Flemington Road and Grattan Street.
Traffic was closed on Flemington Road in both directions.
Police will prepare a report for the Coroner.