On January 10, 2012, Burke was seriously injured while training on the Park City Mountain Resort Eagle superpipe in Park City, Utah. This is the same superpipe where snowboarder Kevin Pearce was seriously injured in 2009. Onlookers reported that Burke had completed a trick fairly well yet fell onto her head, and the accident did not appear to be very severe. Moments later, however, she went into cardiac arrest while still on the ski slope. She was resuscitated and airlifted to the University of Utah Hospital in Salt Lake City, where she was reported to have been placed in a medically induced coma. The following day, she underwent neurosurgery to repair a tear in a vertebral artery. She died of her injuries on January 19, 2012. According to her publicist, Burke's injuries had resulted in "irreversible damage to her brain due to lack of oxygen and blood after cardiac arrest." Her organs and tissues were donated as she requested before her death. Because the event at which she fell was unsanctioned and hosted by Burke's sponsor Monster Energy, Burke was not covered under the insurance policy that applied to her when she competed for the Canada Freestyle Ski Association. The day after Burke's death, her agent established a website to raise $550,000 to help pay her estimated $200,000 hospital costs and create "a foundation to honour Sarah's legacy and promote the ideals she valued and embodied." On February 23, 2014, Sarah's ashes were spread in the mountains over Sochi, Russia, during the 2014 Olympic Games. Her former coach, Trennon Paynter, spread them on the highest point at Rosa Khutor complex, and in the halfpipe.
On June 12, 2012, the Canadian Olympic Committee announced that Burke was inducted into the 2012 Canadian Olympic Hall of Fame for her role in advocating for ski halfpipe's inclusion in the Olympic program.