The fire broke out just after midnight in the 900-block of Wilshire Avenue, Elk Grove Village officials said.
When fire crews arrived, they saw heavy smoke and flames coming from the front windows of the single-family home.
Police officers and neighbors were trying to get into the home, as they suspected someone was still inside.
Robert Keacher was one of those neighbors.
"I came out here to look right away, and the next thing I know this place is engulfed in flames," Keacher said.
Keacher lives across the street. He said he was banging on windows and doors before first responders arrived, but the fire was overwhelming.
"I just talked to her like a week ago, very nice lady, friendly, talk about the neighborhood, tell us what's good and bad," Keacher said.
Firefighters were able to get inside despite the large flames, and found an unresponsive woman.
They began life-saving efforts, but she could not be resuscitated, fire officials said.
The Cook County Medical Examiner's Office identified her as Cindy Goodwin, and said she died just after 12:40 a.m.
No one else was injured in the incident.
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Firefighters remained on the scene for hours after the blaze.
The home sustained major damage, and the cause of the fire is under investigation.
Neighbors said they were in shock later Friday morning, after the fatal fire on a quiet street.
"It's so sad. It's such a cliche, but you never think this is going to happen in your neighborhood," neighbor Claudia Cesarotti said.
Cesaratti lives down the street, and said she woke up to emergency vehicles on the street.
"It was just so many. I didn't even know they had that much equipment. It looked like they tried to do everything they could, so I am sorry she died," Cesaratti said.