A family member told the BBC the 71-year-old from South Shields was on a "once in a life time holiday".
Her husband John, 72, has been released from hospital. Their two daughters and son are now travelling to India.
Investigations are under way to discover what caused the train, which was carrying 37 Britons on the Kalka to Shimla mountain line, to derail.
Some reports suggest the specially-chartered train was going too fast.
Great Rail Journeys, the York-based tour company which organised the trip, earlier said the families of those killed had been informed.
Representatives from the company are due to meet survivors.
Mrs Nichols's niece Andrea Davison told the BBC she was grandmother to five children and great-grandmother to two children. She was also volunteer for the Samaritans.
Three carriages of the four-carriage train came off the rails shortly after leaving Kalka railway station at 13:20 local time, a rail official told the BBC.
Onboard were 36 passengers and a tour manager on day three of a 13-day trip.
Confirming the deaths of two British nationals on Saturday, Foreign Office minister for Asia Hugo Swire said he was "deeply saddened".
Local police said nine people were injured, including six Britons.
Three people - two passengers and the tour guide - are still in hospital with what are believed to be non-life threatening injuries, Great Rail Journeys said.
Chief executive Peter Liney thanked the Foreign Office for its assistance, and said a group of passengers were now in a hotel in the nearby city of Chandigarh.
An emergency response team from the company, including a counsellor, had landed in Delhi and was on its way to Chandigarh, expected to arrive about 17:30 local time, he said.
"A number of the passengers have chosen to move on from the hotel in Chandigarh and have gone to Shimla, where Great Rail Journeys will ensure that an experienced tour manager is made available," he added.
The new tour manager would arrive in Shimla on Monday, he said.
Dinesh Kumar, divisional railway manager of Northern Railways, told the Times of India the cause of the incident was not immediately clear and an inquiry had been ordered.
BBC India correspondent Sanjoy Majumder said consensus among survivors was that the train was going "too fast", especially on the sharp bends.
Passenger David Carding from Norwich, said: "Obviously we were totally shocked and couldn't understand at first what was going on.
"One lady was brought alongside our carriage, and one of the other passengers attended to her, and she had really severe head and facial injuries."
The picturesque Kalka-Shimla mountain railway is a Unesco world heritage site and tourist attraction, often called the toy train line.
It was opened in 1903 to connect Shimla, the summer capital of British India, with the northern plains.
The railway climbs more than 4,000ft (1,200m) through the Himalayan foothills, and is famous for its many bridges, tunnels and panoramic views.
One of the two British tourists killed after a train derailed in northern India has been named as Joan Nichols.