Police officer Kyaw Naing said clashes broke out in Thabyachaing village, about 20 kilometers (12 miles) north of the coastal town of Thandwe, on Tuesday afternoon.
He said the 94-year-old woman, Aye Kyi, died of stab wounds and that between 70 and 80 houses were set on fire.
The visit by Thein Sein to the divided region was his first since sectarian violence broke out more than a year ago.
He arrived in the Rakhine state capital of Sittwe and was scheduled to travel to several more towns in the area, including Maungdaw to the north and Thandwe to the south, where Buddhist mobs started torching Muslim homes Sunday, a senior official in the president’s office said.
He declined to be identified because he was not authorized to speak about the sensitive trip.
Sectarian clashes that began in Rakhine state in June 2012 have since morphed into an anti-Muslim campaign that has spread to towns and villages nationwide. So far, hundreds of people have been killed and more than 140,000 have fled their homes, the vast majority of them Muslims.
Thein Sein, who has been praised for making moves to transition from half a century of military rule, has also been criticized for failing to contain the unrest and protect the country’s embattled Muslim minority.
The latest flare-up began in the coastal town of Thandwe on Saturday after a Buddhist taxi driver told police he had been verbally abused by a Muslim small business owner while trying to park in front of his shop, according to a state government spokesman.
Police took the Muslim man in for questioning. But when he was released soon afterward, people became angry and started throwing stones at his home.
Several houses were burned Sunday, and a curfew was imposed. But on Tuesday, ethnic Rakhine Buddhist mobs began new arson attacks in the region, 270 kilometers (170 miles) northwest of Yangon.
Hundreds of rioters burned “many” Muslim homes in three villages near Thandwe on Tuesday morning, according to a police officer stationed in Thandwe who declined to be identified. He said the villages included Thabyuchaing, Shwe Hlay and Linthi, all of them about 30 kilometers (20 miles) from the town center.
A Muslim resident of Thandwe, Myo Min, said three other villages elsewhere had also been hit, and some Buddhist homes were burned in the mayhem.