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The news was reported by Japanese-language news outlets ANN and NHK, and we saw it on Kotaku.
39-year-old Keiji Gooh, the driver, has reportedly been arrested over the incident, which took place in the city Tokushima at 7.25PM. He reportedly said that "I was playing Pokémon Go while driving, so I didn't really see what was in front of me."
The two victims have been named as 60-year-old Kayoko Igawa, who suffered "serious injuries," and 72-year-old Sachiko Nakanishi, who has died in hospital.
Niantic, the development studio behind the popular smartphone game, has urged users not to play while driving. It reminds users to be aware of their surroundings when it loads up, and has a pop-up message warning users: "Do not play Pokémon GO while driving."
It even reminds users that it shouldn't be used while driving if the player is moving too fast, and asks them to confirm that they are a passenger.
But this isn't stopping some reckless gamers, with hundreds of players in Taiwan being fined for playing Pokémon Go while driving or riding motorbikes.
There have also been multiple other non-fatal crashes, including when one gamer drove into a tree, and another incident in which a distracted player crashed into a Baltimore police car.