It appeared the two vehicles collided as one attempted to turn right from the highway into a driveway, police said.
The car attempting the right-hand turn was travelling north and its female passenger died at the scene.
The male driver of the car has been taken to Taupo Hospital, as has a female passenger in the second car, which was travelling south.
The second car's male driver was uninjured.
At this stage it was not believed the injuries suffered by the two people transported to hospital were serious, police said.
A serious crash investigation is underway and police are working to re-open the road as soon as possible.
