Clutha-Taieri Area Response Manager Senior Sergeant Alastair Dickie, of Mosgiel, said the single car crash happened about 9.15am on State Highway 1 at Stony Creek about 10km north of Balclutha.
A SsangYong Rexton SUV was driving northward when it attempted to overtake another vehicle at a passing lane.
The driver lost control of the vehicle, which careered into a bank and through a fence on the left side of the road.
Snr Sgt Dickie said the 69-year-old female passenger was thrown from the vehicle and died at the scene.
The driver, a 71-year-old man, was flown by helicopter to Dunedin Hospital in a critical condition.
Both people were from Southland, Snr Sgt Dickie said.
The vehicle rolled several times before it stopped in a paddock about 30m away from the road and was extensively damaged, Snr Sgt Dickie said.
Emergency services from Balclutha and the Serious Crash Investigator unit attended the scene.
The highway was reduced to one lane for several hours but the road had since been cleared.
Snr Sgt Dickie said inquiries were continuing.
