Fatima Mohamed Yussef, 30, from Khanka village in the Qaliubiya governorate, died at Cairo's Abbassiya hospital, where she was taken when she first became ill, said Abdel Rahman Shahin, head of the government's anti-bird flu committee.
She was one of four confirmed human cases of the deadly virus in Egypt, which is on a major route for migratory birds at the crossroads between Asia and Africa.
On Sunday, the government had expressed hope that Yussef was out of harm's way.
Yussef had continued to raise and slaughter chickens despite a government ban after the virus was found in Egypt in mid-February.
She is the second suspected bird flu death in Egypt after a man died more than a week ago from the virus. The other two Egyptians infected by the virus were released from the hospital over the weekend.
The H5N1 strain of bird flu has killed about 100 people worldwide, according to the World Health Organisation. Millions of birds have been slaughtered.
Earlier on Monday, the spokesman for the government's anti-bird flu committee, said the country may have a fifth case after an 18-year-old woman was hospitalised with bird flu symptoms.