A woman, said to be in her late 60s, was pulled from the driver's seat of the vehicle by a U.S. Coast Guard helicopter.
She was later pronounced dead on the scene.
It was unclear how the car got into the Niagara River. Witnesses reported seeing it floating near a pedestrian bridge, where it was believed to have gone in. Roads in the area were slippery as a light snow fell.
Photos and videos taken by bystanders showed the car almost completely submerged with only part of the roof and open trunk hatch visible through the whitewater in the early afternoon.
Police used a drone to determine it was occupied.
Authorities said the woman lived in the area. Her name was not released pending notification of her relatives.
After the rescue, the vehicle remained about 50 yards from the brink of the American Falls, one of three waterfalls that make up Niagara Falls. Onlookers watched as emergency crews prepared to try to pull the vehicle from the water.
The car remains in the water while State Parks determines the best course of action to remove it.
An investigation is continuing into how the car ended up in the river.
(The Associated Press contributed to this report.)