A woman who went missing in Nelson on one of the coldest nights of the year was lucky to be found before hypothermia set in, police say.

The alarm was raised after the 74-year-old failed to return to her retirement village on Wednesday after her afternoon walk.

Police, a specialist dog team from Blenheim and Land Search and Rescue Nelson volunteers found her about 8.30pm on steep terrain above the retirement village.

“While not seriously injured, she was showing signs of becoming hypothermic after spending several hours exposed to the cold conditions,” Detective Jonathan Evans said.

Land Search and Rescue Nelson volunteers then carried her out of the steep gully on a stretcher before St John ambulance staff transported her to hospital.

The woman has been discharged and was recovering at home, supported by retirement village staff and her family.

"The combined effort of police staff, Land Search and Rescue volunteers and Hato Hone St John meant she was quickly located, safely recovered from challenging terrain and provided with the medical attention she needed," Evans said.

"We are incredibly grateful for the support provided by our partner agencies. Their professionalism, expertise, commitment and readiness to respond played a significant role in ensuring the woman's safety and ultimately saving her life."