Liz Page's mother, Phyllis Lilley, 94, was admitted to Dorset County Hospital in Dorchester after a stroke last year.
The hospital, which has apologised, called to say she had passed away during the night.
Mrs Page told The Sun it did not enter her mind that the body would not have been her mother.
Speaking to BBC News, she said: "I last saw my mum on a trolley with an oxygen mask over her mouth in A&E, [her death] was the news I was expecting.
"My husband took me about an hour or so later. We were shown a lady in a cubicle, she looked like my mum looked when she'd been asleep in her chair, with her mouth open and her nose in the air, and her hair stuck to her forehead.
"I just said simply 'goodbye' and kissed her forehead."
Mrs Page returned home with her husband to Charminster, near Dorchester, and began making funeral arrangements until the hospital rang up later that day to say there had been a mistake and her mother was still alive.
"The gist was that my mum wasn't dead, they found her in another part of the ward," Mrs Page said.
"Nobody should receive news that someone has died, be shown the wrong body in a state of grief and then find out they're alive."
Mrs Page said staff told her the woman who died had a similar name.
She has never revealed the ordeal to her mother, who is now in a care home. Mrs Page said she decided to speak out to help prevent future mix-ups.
Dorset County Hospitals NHS Trust said it was an "unacceptable situation" and it had fully investigated the March 2014 incident.
A spokesman added: "Mrs Page made a complaint to the trust and received a full explanation and apology from the chief executive.
"We are extremely sorry for the distress caused to Mrs Page and her family. The staff involved were also very upset by what happened and lessons have been learnt. Nothing of this nature has happened since this incident 18 months ago."
The hospital said the mix-up had led to a change in its procedures.
A daughter "kissed her mother goodbye" before being told she was actually still alive and hospital staff had got the wrong body, it has been revealed.