Daniel (88) was found dead inside the house while Damien’s body was found in a car at the back.
Gardaí are believed to be working on the theory that Damien (50) smothered his father before dying from carbon monoxide poisoning, but are awaiting the results of post-mortem examinations.
The deaths sent shockwaves through the community, where locals say they do not know what could have led to such a tragedy so close to Christmas.
Local people described the family as well-known and highly respected.
Both men were said to be “extremely intelligent and engaging”.
Mr Duffy Sr was head of the ESB in Letterkenny for several years and his son also worked with the company.
Damien was regarded as a “computer genius” and had graduated with first-class honours and was planning to do a masters.
He often worked in a self-contained flat at the back of the bungalow.
A neighbour who called to the house at around 2pm yesterday made the tragic discovery and alerted gardaí, who sealed off the scene.
It is believed Mr Duffy Sr had not been seen in around a week, and gardaí are trying to determine when he died.
Neighbours said both men were witty, and Mr Duffy Sr “idolised” his son.
Both were Manchester United fans, were season ticket holders and often went to matches at Old Trafford.
They also loved snooker and were “very creative”, often working on building projects together.
Damien’s mother, Christine, died in 2009 and the two men lived in the house together.
The family suffered another tragedy only two years ago when Mr Duffy’s daughter, Caroline, died from cancer at the age of 48. Another daughter lives nearby.
A neighbour and life-long friend of the family said: “Daniel and Damien were two of the finest people – hard working, highly intelligent, creative and very entertaining. This is incomprehensible.
“I am devastated and will miss them terribly.”
Yesterday afternoon, local people passing the family home blessed themselves as they slowed down as a mark of respect.
A number stopped in a bid to catch the family’s pet dog, which ran down the road and away from the scene.
A Christmas wreath hung from the front door of the bungalow while a Christmas tree stood in the garage window at the rear.
Two large satellite dishes on the garage are believed to be connected with Damien’s work with technology.
A neighbour and friend who asked not to be named described Mr Duffy Sr as “a gentleman” who was loved and respected by everyone.
“I am horrified by this. Daniel was a lovely man and for this to happen is just unthinkable,” the neighbour said.
“He worked for years in the ESB and was good-humoured and funny and great to be around.”
Jimmy Kavanagh, Mayor of Letterkenny and Milford Municipal District councillor, told Newstalk Breakfast that the community is totally shocked and saddened by what has happened.
“It’s Christmas Eve and that has heightened the sadness of the whole event… the fact that Christmas is such a family time.”
He said the hearts of “everyone in the community” go out to the family and friends of the deceased.
Cllr Kavanagh said both men were well-known and well-liked people “who got on with everyone”.
“They were a highly respected family," he said. "There’s great sadness in the area about it. Something obviously went tragically wrong.
“This is something that came totally out of the blue.”
Local councillor Gerry McMonagle said the whole community was stunned by the news.
“It’s a dreadful tragedy, and our hearts go out to the families involved,” he said.
“The whole community is stunned. It’s a nice quiet area and people just can’t believe it.
“People feel they have troubles, but tragedies like this put life in perspective.
“Our thoughts and prayers are with the family.
“It’s an awful, tragic incident, all the more so when it’s father and son and we are just two days away from Christmas.
“Our thoughts and prayers are with all the extended family at this time.”
Councillor Michael McBride echoed the shock of the local community.
“It’s a real tragedy, especially at this time of the year,” he said.
“Our hearts go out to the family and the neighbours there.
“It is an area we would never associate with any kind of violence. There is deep shock in the community tonight.”