The blaze at Grange Park, Limavady, was reported at 06:25 BST on Monday.
The Northern Ireland Fire and Rescue Service (NIFRS) said:  "A passer-by noticed smoke coming from the house and alerted the emergency services."
The passer-by also heard a smoke alarm. Three fire crews went to the house but the fire was already out.
The woman died at the scene.
Alan Robinson, a DUP councillor for the area, said the whole town was stunned by the death.
"Sadly we have lost one of our own today and we all extend our sympathies to her friends and family," he said.
"Someone was walking past on their way to work and noticed black smoke and immediately contacted the authorities. Sadly, when the authorities entered the premises we had a fatality.
"People are heartbroken," Mr Robinson added.
NIFRS said an investigation into the cause of the fire is under way and added that their "thoughts are with the family and friends of the lady who has died".
A woman in her 50s has died following a house fire in County Londonderry.