Emergency services were called to the A442, near the Ugly Duckling pub, north of Wellington, at 3.46pm on Sunday.
Fire, police and ambulance staff including a Midlands Air Ambulance rushed to the scene of the collision where a white BMW 2 Series and a red Hyundai i30 had collided.
West Mercia Police confirmed that the driver of the Hyundai, a 78-year-old woman, died at the scene.
The driver of the BMW, a 19-year-old man, was arrested at the scene on suspicion of causing death by dangerous driving and remains under investigation by police.
A spokesperson from West Midlands Ambulance said: “On arrival crews discovered two patients, one from each car.
“A woman was found to have suffered critical injuries in the collision and sadly, it quickly became apparent nothing could be done to save her and she was confirmed dead at the scene.
“A man, from the second car, was treated for injuries not believed to be serious before being taken to Royal Shrewsbury Hospital by land ambulance.”
Police are appealing for information and have asked anyone who witnessed the collision or has any information or dash-cam footage which may help with the investigation is asked to contact PC Chris Stones on firstname.lastname@example.org or 07870162981 quoting incident 405 of November 27.