Tasmania Police Senior Sergeant Tony Grincais said the bodies were found lying on the floor of the caravan.
The Tasmania Fire Service was called and found the air was thick with carbon monoxide.
"They ascertained that there were high levels of carbon monoxide present in the caravan ... and this was most likely the cause of death, although that will be confirmed by the coroner," Sen Sgt Grincais told AAP.
"There was a gas cylinder which was still turned on in the caravan, which was connected to a portable fridge-freezer and a cooking stove.
"The indications are that one of the appliances in the caravan has either been left turned on overnight, or it has leaked overnight, which has caused the caravan to fill with carbon monoxide or gas and led to their deaths."
The caravan was taken to a police garage in Hobart for a forensic examination on Monday.
The men had arrived in Little Lagoon on Friday night and were believed to be deer hunting.
Sen Sgt Grincais said it appeared that they had tried to get out of the caravan, given the location of their bodies.
He said the tragedy served as a warning to others about the dangers of using portable gas appliances in confined spaces.
"Things like gas stoves and those types of appliances ... should never be used in an enclosed environment, whether it's a tent, a caravan or a vehicle or whatever, you should always have adequate ventilation," he said.
"Gas operated appliance such as fridges should be regularly checked to make sure that they don't have leaks because once you go to sleep if these things leak or you leave them turned on you'll never know about it ... you just go to sleep and you never wake up."
-AAP