The woman, named by refugee advocates as Hodan Yasin, is currently in a critical condition, according to Australian Immigration Minister Peter Dutton. She has been transferred to Australia for medical treatment.
On Sunday, another refugee, named as Omid, died in an Australian hospital
after setting himself alight on Nauru two days earlier in the presence of United Nations officials.
Critics say the self-immolations reflect the desperation of refugees living under Australia's controversial immigration policy.
Asylum seekers who arrive on Australian shores by boat are told they will never settle in the country, and are transferred to remote processing centers on the pacific islands on Nauru and Papua New Guinea.
Hundreds of people, including children, have lived for months or even years in these detention centers.
Immigration Minister Dutton on Tuesday struck out at refugee advocates for "encouraging them to engage in behaviors they believe will pressure the government to bring them to Australia."
He said that the Australian government would not waiver from its policy
, designed to stop refugee boats from coming to its shores and asylum seekers from drowning at sea.
The country's opposition Immigration Minister, Richard Marles said the government must secure a viable third country to settle refugees in. He said the current government policy was leaving people "desperate and without hope."
In a statement, the Nauru government said: "We are distressed that refugees are attempting such dreadful acts in order to attempt to influence the Australian Government's immigration policies."
Refugee "longed for a future"
A former teacher of Yasin's described her as a kind woman and a good friend.
"Quietly, gradually, in her gentle voice she told us tragic pieces of her past in Somalia. She wanted to learn, she longed for a future," the teacher said.
The Refugee Action Coalition said Yasin had been receiving medical treatment in Australia for a head injury for six months. Last Wednesday, she was one of three refugees returned to Nauru by immigration authorities, according to the advocacy group.
On Monday, the UNHCR released a statement calling for the immediate movement of refugees on Nauru and Manus Island to humane conditions.
Based on numerous visits over the past several years, the UN agency described the current arrangement as "completely untenable."
"There is no doubt that the current policy of offshore processing and prolonged detention is immensely harmful," the UNHCR said.