Three people were killed in the incident, which was captured on another vehicle's dashcam near Watlington, in south Oxfordshire.
Witnesses claimed the Subaru Forester, which was towing the caravan, was driving at up to 60mph.
Thames Valley Police said the driver and a passenger of the Subaru, both aged in their eighties, and the driver of a Ford Mondeo, a man in his thirties, died.
The vehicle collided with another car, a Ford Focus, although police said there were no further injuries.
West Oxfordshire councillor Colin Dingwall, who was on the M40 at the time of the crash, told the Oxford Mail he had to swerve out of the wayward driver’s path.
"I've seen a lot of things in my 50 years on the road, but I've never seen a caravan coming the wrong way up the M40," he said.
Liz Hindmarsh tweeted: “My husband had to swerve into the middle lane otherwise he’d have been hit by the caravan travelling the wrong way down the M40 in the outside (fast) lane.”
Emergency services were called to the scene after the car collided with two vehicles between junctions six and seven.
Thames Valley Police said the collision incident happened just before 4pm and led to closure on the northbound and hours of tailbacks on the southbound.
A spokesperson for the force appealed for anyone with dashcam footage of the accident to contact the police.
“At just before 4pm today the force received reports of a car towing a caravan travelling in the wrong direction on the northbound carriageway of the M40. The Force received reports of a car towing a caravan travelling in the wrong direction on the northbound carriageway".
They added: "We would urge anyone with footage of the collision, or of the car towing the caravan to contact police as soon as possible."
All the vehicles involved were recovered around 11:30pm and emergency resurfacing works were completed at 05:00am.
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