Police were called to a house at Quarry Road in Knockloughrim after a car was reported on fire at 5.40 am on Tuesday.
The woman, who was in her 50s, died in hospital on Tuesday evening.
A 59-year-old man has been arrested on suspicion of murder.
He was also taken to hospital for treatment for burn injuries.
Detective Chief Inspector John Caldwell said: “At around 5.40am on Tuesday morning, October 12, police received a report of a car on fire outside a house on the road.
“Police and NIFRS attended the scene and a woman, aged in her 50s, who was in the car was taken to hospital for treatment.
“Sadly, despite the best efforts of hospital staff, she succumbed to her injuries and died in hospital this evening.
“A 59 year old man has been arrested on suspicion of murder. He has also been taken to hospital for treatment for burn injuries.
“My investigation is at a very early stage and I would appeal to anyone who was on the Quarry Road early this morning and who witnessed anything to contact Detectives on 101 quoting reference 227 12/10/21.”