The barbaric act took place in the remote village of Latti, in the Sar-e-Pul province which is still under Taliban control.
Under their strict rules, women are prohibited from leaving their homes unless accompanied by a close male relative.
From The Express
They are also banned from working or receiving an education and are forced to wear the burka.
It is believed the 30-year-old had gone to the market to shop on Monday, while her husband was away in Iran.
As the couple have no children, the woman had left home alone – which is banned under the strict Taliban laws.
She was ambushed by the group of men in the street, before being attacked and beheaded.
Provincial governor spokesman Zabiullah Amani confirmed the incident, adding it was likely the armed men were linked with Taliban.
However the Taliban rejected any involvement in the horrific attack.
The incident is just the latest in a series of violent assaults on women in Afghanistan in recent months.
Just a few weeks ago, five female Afghan guards working in the airport in southern Kandahar were killed by unknown gunmen as they were on their way to work.
The women, who worked for a private company that provides luggage and body search services for female passengers, were in a van when three gunmen opened fire at them.
Although Afghan women have made giant strides since the Taliban regime was ousted in 2001, they still suffer high levels of violence and oppression.
More than 3,700 cases of violence against women were recorded in the first eight months of this year, compared with 5,000 cases in the whole of last year.