The crash, between a Mini and a Nissan 4WD, happened at the intersection of Clutha and Ventry Sts, just before 12:50pm.
The woman was transported to Dunstan Hospital, but died there from her injuries.
Police were forming a good picture of what happened thanks to witnesses, and were satisfied neither speed nor alcohol were involved, Central Otago sub-area supervisor Senior Sergeant Ian Kerrisk said.
Police and Victim Support were working alongside the families of the occupants of both vehicles involved in the crash.
The driver of the second vehicle was uninjured, but understandably shaken, Snr Sgt Kerrisk said.
Police are asking anyone with information about what happened, who has not yet spoken to police, to phone the Alexandra police station on (03) 440-2500, extension 34400, and leave a message if necessary.
Three police cars, an ambulance and two fire engines attended the crash.
The Serious Crash Unit also attended.
