Fatma Fathi Mohammed, 25, died in hospital in the Nile Delta province of Mansura, where she was admitted on December 27 after complaining of high fever and shortness of breath, health ministry spokesman Abdel Rahman Shahin said in a statement carried by the official MENA news agency.
Mohammed, who comes from neighbouring Daqahliya province, had been exposed to infected poultry, Shahin said.
It was the 42nd case reported in humans since the virus first appeared in the country in February 2006. Her death was the 17th in Egypt.
She was the second woman to die of bird flu in a week. Oula Yunes Ali, 25, died on Tuesday after being admitted to hospital the previous Friday with a high fever.
Two others have been diagnosed with the disease since Ali's death.
The first case is a 50 year old woman from Damietta province who was hospitalized on December 24 and is in a critical condition, according to the World Health Organisation.
The second case is a 22-year-old woman chicken seller from Menufia province. She was admitted to hospital on December 26 and is currently recovering in intensive care, the WHO said.
Health Minister Hatem al-Gabali warned against "slackness in the preventive measures taken to fight bird flu especially as winter approaches."
Following Tuesday's death, Shahin called on the public to remain vigilant and deplored the relaxation of precautions because of the belief that the virus had disappeared. Her death was the first in six months.
Shahin called for "banning the raising of fowl in towns, transporting them between provinces without authorisation and also reinforcing controls on where they are raised and sold."
He warned that sick people denying they have been in contact with contaminated domestic fowl makes it more difficult to detect the virus and to treat it, which leads to people dying.
Women and children have borne the brunt of the virus because of their role in taking care of domestic fowl.
Egypt's location on major bird migration routes and the widespread practice of keeping domestic fowl near living quarters have led to it being the hardest-hit country outside Asia.
The government says it is conducting a vigorous campaign to combat the spread of the virus through vaccinations and raising awareness.
The World Health Organisation said earlier this year that countries around the world had improved their defences against bird flu, but the situation remained critical in Egypt and Indonesia where the risk of the H5N1 virus mutating into a major human threat remains high.