The officer's identity was not immediately released but the woman was identified as Chequita Adams, 27.
The crash occurred shortly after 1 a.m. in the 4400-block of West Roosevelt Road.
The officer was driving in his personal SUV when he crashed into Adams's vehicle, said Chicago police spokesperson Anthony Guglielmi. He said it appears the cars collided at a high rate of speed.
Both Adams and the officer were pinned into their vehicles which caught fire. They were pronounced dead at the scene.
Surveillance video nearby shows the officer's Jeep being pursued by a police officer with lights engaged prior to the crash. Police said the officer's personal vehicle met the description of a vehicle in a carjacking but it was not and the pursuing officer turned off the lights.
CPD OFFICER KILLED
The officer, a four-year veteran of the Chicago Police Department, was with the tactical unit and had left District 10 minutes before.
"It's with a heavy heart that I offer my deepest condolences to the young lady who lost her life and her family and the family of the off-duty police officer," said Chicago Police Supt. Eddie Johnson.
Since the crash involved an off-duty officer and a police pursuit, Johnson has asked the Independent Police Review Authority to investigate the crash.
At least 20 police cruisers were seen leaving Stroger Hospital in a procession following the officer's body.
"I JUST KNEW"
When Adam's mother Chereta Adams woke up to the news of a crash, it got her attention because her daughter was not home yet.
"When they said that car, I just knew, I just knew. I was praying that it wasn't her but at the same time I knew," Chereta Adams said.
Chequita Adams worked as a security officer for many downtown events. She worked at Northerly Island over the weekend and had just gotten her assignment for the Taste of Chicago.
"Beautiful personality, beautiful spirit," said cousin Eugene Harris. "She loved everybody she came in contact with."
"I just can't believe. I'm so mad because it was just me and her," Chereta Adams said.
Several years ago, Chequita Adams' 3-year-old sister had died. Their mother said her only comfort is that her daughters are together now.