A local resident said she was woken by the sound of braking and the car hitting the tree, as well as the horn going off.
She had called emergency services and said she was surprised the man had survived the smash.
Senior Station Officer Bryce Coneybeer said the driver's side of the car had hit the tree and the vehicle had had to be winched off it so the occupants could be cut out.
Mr Stretton said the 22-year-old driver suffered "multi-system trauma", with injuries to his bones, lungs and head.
He was initially taken by ambulance to Wanganui Hospital, and later transferred to Wellington.
Yesterday afternoon the man was in a "serious condition" in Wellington Hospital's intensive care unit.
Three Wanganui firefighter units attended the crash, spending a couple of hours at the scene.
Ian Parker, who has lived on the corner for 17 years, said there had been up to six car crashes while he had lived there, and a few more motorcycle crashes as well.
"It is a dangerous corner."
Detective John Dale from Whanganui Police said the woman had died on impact.
The two were the only people in the car.
The road was closed for several hours while the crash was cleared and a scene examination was carried out. The road had opened again at about 4am.
Mr Dale said no further details about the deceased woman was available at this time.
He said the vehicle involved was a 1993 Toyota Corona sedan light-coloured metallic blue.
"Police want to hear from anyone who may have seen the crash or the vehicle in the hours preceding it." Mr Dale said. Investigations into the crash are continuing.
Anyone with any information is encouraged to contact Whanganui Police on 349 0612, or Crimestoppers on 0800 555 111.