The blaze happened at a house in Falcarragh some time on Thursday or Friday but the victim Bridie McFadden was only discovered at 9.30pm on Saturday night.
The house is located in the townland of Dunmore which is about a mile and a half outside the town.
Locals awoke to hear the news this morning and are still in shock. Ms McFadden lived alone and was originally from Annagry.
The woman who died was 40 and is well-known in the area.
A Garda spokesman said: “Gardaí are investigating a fatal house fire at Dunmore Lane, Falcarragh, Co.Donegal. The incident was discovered at about 9.30pm on the 30th June. The body of a 40 year old woman, who lived alone, was discovered in the hallway of the house.
‘There was evidence of a fire in the living room of the house which had extinguished itself sometime earlier.
“The scene is preserved for forensic technical examination and a post mortem examination will take place tomorrow. At this stage Gardaí believe the incident to be a tragic accident.”