On 16 September 1977, Bolan was riding in a Mini 1275GT driven by Gloria Jones as they headed home from Mortons club and restaurant in Berkeley Square. After she crossed a small humpback bridge near Gipsy Lane on Queens Ride, Barnes, southwest London, the car struck a fence post and then a tree. Bolan was killed instantly, while Jones suffered a broken arm and broken jaw.

At Bolan's funeral, attended by David Bowie, Rod Stewart, Tony Visconti, and Steve Harley, a swan-shaped floral tribute was displayed outside the service in recognition of his breakthrough hit single "Ride a White Swan". His funeral service was held on 20 September 1977 at the Golders Green Crematorium in north London, where his ashes were later buried under a rose bush. The car crash site has subsequently become a shrine to his memory, where fans leave tributes beside the tree. In 2013, the shrine was featured on the BBC Four series Pagans and Pilgrims: Britain's Holiest Places. The site, referred to as Marc Bolan's Rock Shrine, is owned and maintained by the T. Rex Action Group.

Bolan never learned to drive, fearing a premature death. Despite this fear, cars or automotive components are at least mentioned in, if not the subject of, many of his songs. He also owned a number of vehicles, including a white 1960s Rolls-Royce that was loaned by his management to the band Hawkwind on the night of his death.