The woman, named locally as Claire Glatman from Bedal in North Yorkshire, is understood to have suffered severe leg injuries after being struck by the propeller of the vessel while she was swimming in the open sea.
She was discovered by bathers close to Avlaki Beach on the north east of the island on Monday morning, local news site EPT reported.
It said she had been hit by a speedboat towing a water skier and that the vessel fled the scene.
Unconfirmed reports suggest three British nations have been detained in connection with the incident.
The 60-year-old, was taken to Corfu General Hospital, but was pronounced dead on arrival.
The official cause of death has yet to be confirmed, but according to the Corfu Press news site, preliminary findings suggest she died after losing too much blood when the propeller cut a critical artery in her leg.
According to the Daily Telegraph, she was on holiday with her husband Mark, 63, and the eldest of her two daughters. It said that Ms Glatman also has two sons, but it is not known if they were on holiday with the rest of the family.
EPT said the victim's husband and daughter had been informed of her death.
A spokeswoman for the Foreign and Commonwealth Office said: "We are in contact with the local authorities following reports that a British woman has died in Corfu."