Mercedes had also debuted its new Mercedes-Benz 300 SLR sportscar in the 1955 World Sportscar Championship season, with some notable success, including a win at the Mille Miglia. The 300 SLR featured a body made of an ultralightweight magnesium alloy called Elektron with a specific gravity of just 1.8 (for reference, aluminium has an S.G. of 2.7 and iron 7.8). This body lowered the overall weight of the car, improving performance. However, the car lacked the contemporary state-of-the-art disc brakes featured on the rival Jaguar D-Type, forcing Mercedes' engineers to incorporate a large air brake behind the driver's compartment that could be raised to increase drag and slow the car down with sufficient rapidity for most conditions.
Levegh, being ahead of Fangio on the track, did not have time to react. Levegh's car made contact with the left rear of Macklin's car as he came quickly upon the slowed car. The aerodynamic design of the Austin-Healey featured a long, ramp-like rear bodywork. When Levegh hit the Austin-Healey from behind, his car became airborne, soaring towards the left side of the track, where it impacted an earthen mound set on the side of the track to protect spectators.
The 300 SLR struck the mound at such speed and angle that it was launched into a somersault, which caused loosened and damaged parts of the car to be flung away from the car. This included the bonnet and the front axle, both of which separated from the frame and landed in the crowd. With the front of the spaceframe chassis—and thus crucial engine mounts—destroyed, the car's heavy engine block also broke free and slammed into the crowd. Levegh was also thrown free of the somersaulting car, fatally crushing his skull when he landed.
As the remains of the 300 SLR slowed its somersault, the fuel tank, situated behind Levegh's seat, ruptured. The ensuing fuel fire raised the temperature of the remaining Elektron bodywork past its flashpoint, which due to its high magnesium content was already very low. Magnesium's properties mean that a combustion in oxygen is possible at relatively low temperatures, allowing the alloy to burst into white hot flames, sending searing embers onto the track and into the crowd. Rescue workers attempting to put out the burning wreckage were initially unsuccessful, as they unknowingly used water on the magnesium fire, which only intensified the inferno. As a result, the car burned for several hours. In total, 80 spectators were killed either by flying parts or from the fire.
Fangio, driving behind Levegh, narrowly escaped the heavily damaged Austin-Healey which was now skidding to the right of the track, in his path. Macklin then hit the pit wall and bounced back to the left, crossing the track again. He impacted the barrier near the location of the now burning 300 SLR, leading to the death of another single spectator, although Macklin survived the incident.
During the night, after reports of the number of spectators killed began to be confirmed and relayed back to Mercedes-Benz headquarters in Stuttgart, the official order came for the two remaining Mercedes cars, driven by Juan Manuel Fangio/Stirling Moss and Karl Kling/André Simon, to immediately withdraw from the race as a sign of respect to the victims. At the time, Mercedes was leading the race by a lap over Jaguar.
Mike Hawthorn and the Jaguar team, led by motorsport manager Lofty England, kept racing, believing they were not responsible for the crash. Hawthorn won the race with teammate Ivor Bueb, although they did not celebrate out of respect. Funeral services for the dead were held the next day at the cathedral in Le Mans.
After the race, an official inquiry into the accident ruled that Jaguar was not responsible for the crash, and that it was merely a racing incident. The death of the spectators was blamed on inadequate safety standards for track design, leading to a ban on motorsports in France, Switzerland, Germany, and other nations until the tracks could be brought to a higher safety standard. Switzerland's ban allowed for the running of timed motorsports such as hillclimbs, yet banned sport which allowed two cars to compete alongside one another. This forced swiss racing promoters to organize circuit events in foreign countries like France, Italy and Germany. In June 2007 the Swiss government lifted the ban on racing.
The rest of the 1955 World Sportscar Championship season was completed, with two more races at the British RAC Tourist Trophy and the Italian Targa Florio, although they were not run until September and October, several months after the accident. Mercedes-Benz won both of these events, and were able to secure the constructors championship for the season.
Levegh's co-driver, John Fitch, became a major safety advocate and began active development of improving safety to road cars and racing circuits.
After winning also the last major race of the 1955 season, the Targa Florio, Mercedes-Benz announced that they would no longer participate in factory sponsored motorsport in order to concentrate on development of regular cars. The self-imposed ban on circuit racing lasted until the 1980s.