Authorities say it happened just before noon after heavy construction equipment struck the moving gondola. The force of the impact ejected the two occupants out, police said.
Officers say the two passengers were inside riding it either up or down the mountain at the time of the incident.
Emergency services were dispatched to the site and they were both rushed to hospital in critical condition. Officials confirmed one of their deaths later Sunday afternoon.
Provincial police say the surviving passenger was transferred to a Montreal-area hospital and their life remains in danger.
The Sureté du Québec (SQ) could not confirm any other details on the victims such as age or sex, nor the height they were at at the time it was struck by a drilling machine.
Investigators will look into the circumstances around the event and the safety measures at Mont-Tremblant, which is about a 1.5 hour drive northwest of Montreal into Quebec’s Laurentian Mountains.
Authorities set up a scene halfway up the mountain in the area the incident occurred to investigate the circumstances.
“We are saddened by this situation and Station Mont Tremblant offers its most sincere condolences to all those involved,” Annique Aird, Station Mont Tremblant’s vice-president of sales, marketing and communications, said in a statement Sunday evening.
The mountain resort village cancelled the rest of Sunday’s Blues Festival that was taking place.
A statement from the popular ski destination said the construction equipment that was involved in the accident was operated by a third party.
Quebec’s Tourism Minister Caroline Proulx said she was following the situation closely.
The gondola ride remains closed until further notice amid the ongoing investigation by Sûreté du Québec officers.
Sgt. Audrey-Anne Bilodeau says police hope to meet with the drill operator and other witnesses, adding that the construction machinery will be inspected.
Last December, a gondola crashed at Mont Sainte-Anne, another popular ski mountain in the province, but no one was hurt.
— with files from The Canadian Press