Police have named the victim as 83-year-old William Stinson from the the Foyle area.
The collision, involving a BMW X1 and a Chevrolet, occurred at approximately 11.15am on Glenshane Road close to the Belfry Country Inn.
A woman, also injured in the crash, is being treated in Altnagelvin Hospital for non life-threatening injuries.
The Glenshane Road remains closed and diversions are in place at the Lismacarroll Road and the Tamnaherin Road.
Police have appealed to anyone who witnessed the accident or who was travelling in the area at the time to contact Strand Road Police Station or the Collision Investigation Unit at Steeple Police Station on 0845 600 8000.