The body was discovered Thursday night when a woman told sheriff's deputies at the Twin Peaks Station that she saw a hand sticking out of the ground near the area of Highland Drive and Scenic View Drive in Crestline.
Deputies found a small cave dug into the hillside. They looked inside and found the hand sticking out from the dirt.
Investigators believe a portion of the cave collapsed and buried the woman.
The body was not removed until the next day because of concerns about further collapse so that a specialized team could be brought in for recovery.
The body has not been identified. Investigators initially believed the person was a male, but once the body was removed, they determined she was female.
She was wearing a white plaid shirt, blue jeans and a baseball cap.
It is not immediately known if anyone else was in the cave when it collapsed.
Officials say transients are known to frequent the area.
Investigators are trying to locate the woman who reported the initial discovery to obtain additional information.