If two creatures with deathtouch block each other do both die?

When two creatures with deathtouch block each other, combat damage is assigned simultaneously during the combat damage step (CR 510.1). Each creature deals its power in damage to the other.

Deathtouch (CR 702.2b) states that any amount of damage dealt by a source with deathtouch is sufficient to destroy the creature it damages. This means even 1 damage from a deathtouching creature counts as lethal damage, regardless of the other creature's toughness.

After damage is dealt, state-based actions are checked (CR 704.5g). A creature is destroyed if it has been dealt damage by a source with deathtouch since the last time state-based actions were checked — as long as it has been dealt any damage at all. Since both creatures dealt damage to each other, both satisfy this condition, and both are destroyed simultaneously.

Example: A 1/1 with deathtouch blocks a 5/5 with deathtouch. The 5/5 deals 5 damage to the 1/1, and the 1/1 deals 1 damage to the 5/5. Both have been damaged by a deathtouch source, so both are destroyed by state-based actions — even though the 5/5 would normally survive 1 damage.

Note: Indestructible creatures are immune to being destroyed this way (CR 702.12b), so if one of the creatures had indestructible, it would survive even deathtouch damage.