Two teenagers who died after the stolen car they were in crashed were not old enough to have their drivers' licences.
Police pursued the Honda Civic after it failed to stop shortly after 2am.
Police said they abandoned the chase almost immediately, because of the dangerous manner in which the car was being driven through the town.
A short time later the car crashed into a power pole.
The four teenagers inside were taken to Masterton Hospital, where two have since died as a result of their injuries.
Detective Senior Sergeant Barry Bysouth said the police officers involved recognised the car as having been stolen from a burglary on Saturday.
Police called off the chase within a few seconds because of the dangerous speed at which the car was travelling, he said.
The four occupants of the Honda were male teenagers aged between 14 and 15-years-old.
Masterton Council CCTV footage showed the reckless nature at which the car was being driven, Mr Bysouth said.
Based on the information he'd seen, he was confident the officers involved had behaved appropriately.
"Recognising risk to the public and the fleeing drivers themselves, [police] withdrew from the pursuit using their own judgment of the situation."
He called on anyone to pull over for police, no matter the circumstances.
"Nothing is worth the tragic loss of life as we found in this instance. These youths would have been interviewed by police and back home by daylight if they had just pulled over."
Masterton mayor Lyn Patterson said the community was tight-knit and people across the district would be deeply affected by the deaths.
"It is a tragic loss of two young Wairarapa teenagers and our condolences go out to their families."
The incident has been referred to the Independent Police Complaints Authority.
No further details about the victims have been released.