The incident happened on Saturday at about 8.50am on the B977 Torphins to Garlogie road near St Duthac Cottage, Raemoir.
It involved a red Honda Jazz driven by Anna Marcinkowski, 38, of Aberdeen, and a red Abarth 500 being driven by a man from Ballater.
Both were taken to Aberdeen Royal Infirmary but the woman later died of her injuries.
The 65-year-old man suffered serious leg and hip injuries.
Sergeant Craig McNeill said: "I am appealing to anyone who may have witnessed this collision to get in touch with us."
Meanwhile, officers have named a 79-year-old man who died after a crash on the A75 in Dumfries and Galloway on Friday.
Alexander O'Haire, of Shawhead, Dumfries, had been receiving treatment at Dumfries and Galloway Royal Infirmary but died on Sunday.