The blaze gutted the small stone cottage in the quiet coastal area of Myross, where the woman lived on her own.
The woman, named locally as Dolores Elward, was understood to be in her late 50s and was well known and liked in the locality.
Gardaí said neighbours raised the alarm just after 8am yesterday.
At least two units of the fire brigade attended the scene from Skibbereen, with more fire personnel arriving afterwards. However, the fire consumed the inside of the small cottage, which backs onto a quiet inlet a few miles out of Union Hall.
The blaze also burned through some of the old slate roof, which was still smouldering yesterday morning, some hours after the fire went out.
It is understood Ms Elward had been ill in recent years after suffering a stroke, and that she was receiving home-help assistance and was also being cared for by an uncle living nearby.
It is understood she had sought to retain her independence by continuing to live in the cottage on her own.
Some neighbours declined to comment and were visibly upset at the tragedy.
One local, Nicholas Swanton, said that Ms Elward’s mother had lived in the same tiny cottage and that Dolores had lived in the house for much of her life, apart from a spell when she lived in England.
He said the fire had spread quickly.
“We were down south at a quarter past eight and the whole place was in flames,” he said.
Gardaí in Skibbereen are investigating the possible cause of the blaze.
The scene remained closed off for a number of hours afterwards.