The woman died following the crash involving a Nissan Qashqai and a black BMW M4 Coupe on Tanton Road near Stokesley at around 5.30pm last night (Tuesday).
The 33-year-old Qashqai driver was taken to hospital where she sadly died, North Yorkshire Police said.
The driver of the BMW, a 41-year-old man from Ingleby Barwick, was arrested on suspicion of causing death by dangerous driving and driving a motor vehicle when alcohol level above limit.
He has been released under investigation while enquiries continue.
North Yorkshire Police is appealing for any witnesses to the crash, or anyone who may have dashcam footage taken in the area at the time or just prior to get in touch.