Emergency services responded to the incident just after 5.30pm on the Midland Hwy near Girgarre-Rushworth Rd.
There were three occupants in one of the vehicles.
The Shepparton woman, 30, in that vehicle died at the scene.
A 31-year-old Kialla woman and a 24-year-old Epsom man were taken to Goulburn Valley Health by ambulance in stable conditions.
The woman was treated by paramedics for upper and lower body injuries, while the man had a suspected upper body injury, according to an Ambulance Victoria spokesperson.
The 19-year-old Lara man driving the other vehicle, and the only occupant of it, was treated for upper body injuries and also taken to Goulburn Valley Health in a stable condition.
Major Collision Investigation Unit detectives attended the scene and will investigate the circumstances surrounding the collision.
Anyone who witnessed the collision, has dashcam or CCTV footage, or with any information is urged to contact Crime Stoppers on 1800 333 000 or submit an online confidential report at crimestoppersvic.com.au
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