She said the car hit a parked car and she and about six others, mainly parents of children from the school, swung into action to perform CPR on the woman, who was slumped over the steering wheel.
The woman was moved from the car and placed under a tree and she and other helpers took turns trying to revive her, she said.
Ambulance staff then worked on the elderly woman for about 30 minutes to try to resuscitate her but she died at the scene, she said.
The mother described the life-saving efforts by emergency services staff involved as "absolutely fantastic".
"They did everything they could. I feel very sad for the woman's family."
The school principal brought blankets out so children leaving school would not see anything, the woman said.
A man who lived on the street, but did not want to be named, said he heard a loud bang and when he went to look, he saw a lot of people surrounding the car.
St John Ambulance and the fire brigade were quickly on the scene and took over, he said.
Police are investigating and the Serious Crash Unit is helping with a scene examination.