The accident happened around 2:30 a.m. on Route 21 near River Drive in Passaic.
Responding officers found two severely damaged vehicles, one of which was on fire.
They extricated the suspect, 30-year-old Adrian Ofarrill, of Newark, from the flaming car.
The driver of the other vehicle was identified as Danielle Daszczyszak, of Clifton, who sustained severe and critical injuries.
She was rushed to St Joseph's Hospital in Paterson, where she was pronounced dead on arrival.
Ofarrill is charged with DWI and several motor vehicle violations, including driving with a suspended license.
He is at St Joseph's Hospital in the intensive care unit.
Police are asking witnesses or anyone with information to call 973-365-3919.