Janet Spaven, 87, from Peebles, was pronounced dead at the scene after her Daihatsu Sirion was involved in a crash with a Citreon Berlingo on the A701 at around 10:20am.
The driver of the Berlingo, a 42-year-old male, was uninjured.
A section of the road was closed for around four hours while investigations took place at the scene, and police are appealing for anyone who witnessed the collision to come forward.
Anyone with any information should contact Lothian and Borders Police on 0131 311 3131 or Crimestoppers, anonymously, on 0800 555 111.
The crash is the latest at the Leadburn junction near Penicuik, a notorious accident blackspot.
A previous fatality at the junction had led to plans for a 400,000 roundabout to improve road safety four years ago.
MSP Christine Grahame said today plans for the roundabout had been ditched after Midlothian Council officials missed a funding deadline, leading to money earmarked for the project being re-allocated. Council chiefs would not comment on the reasons for the scheme being mothballed.
Ms Grahame said: "As many local people know, this is not the first accident, nor the first fatality at this notorious junction. Sadly this was an accident waiting to happen. Last March I warned Midlothian Council that plans to build a roundabout at this site, which were well advanced, should be put back on the table."
The junction connects the A701 Penicuik road, A703 from Peebles and A6094 to Bonnyrigg. Locals say there is an average of an accident a week at the junction, with more serious crashes also common.
In 2005, the 228-year-old Leadburn Inn, which sits nearby, was damaged beyond repair after a driver died when he crashed into the building. The hotel is set to re-open at the weekend after being closed for more than four years.
Proprietor David Fairgrieve said measures were needed to slow drivers who approached the junction at speed.
He said: "It's taken another fatality for this issue to raise its head again. We need to know what the council are going to do. If there had been a set of traffic lights this accident would not have happened."
In 2006, Midlothian Council backed plans for a roundabout at the junction after carrying out a feasibility study. The scheme was due to be funded by the regional transport partnership Sestran, but never went ahead.
A spokesperson for Midlothian Council today said: "We regret the tragic loss of life following a collision at Leadburn junction and our sincere condolences go to the family and friends for their bereavement.
"However, it is not appropriate to comment on, or speculate about, the cause of this accident pending independent investigation by the police."
A police spokesman said inquiries were continuing into the cause of yesterday's crash.