Jonathan Cairns was 18 when he was attacked in Ballykelly on his way home from a night out on 25 April 1999.
His body was found in a shallow grave in Loughermore Forest, about five miles from his home, the next day.
The PSNI said the woman, who was arrested in the Dungiven area on Tuesday, had been released on police bail pending further enquiries.
Detective Inspector Adrian Brown said the teenager’s family and friends “have suffered intolerable grief” and “deserve answers”.
He appealed for anyone with information to come forward.
“I believe that people within the Ballykelly community have information that could assist my investigation.”
“Some people were not prepared to come forward at the time for a variety of reasons but I am asking people to search their conscience and think again.
“Circumstances and loyalties may have changed over years and it is never too late to do the right thing.”
The investigation into Mr Cairns’ murder has involved more than 2,500 witnesses, statements from almost 900 people and 20 searches.
A man was jailed for helping to dispose of his body but no-one has ever been convicted of his murder.
In April the teenager’s parents made a fresh appeal for information on the 20th anniversary of his death.