For a quick-fix, try replacing it with a blank file named .htaccess
Then check your error log file to see why you got the 500-Internal Server Error
If replacing .htaccess with a blank file doesn't work, you'll need to contact your hosting provider to remove it. Ask them if .htaccess is supported in your account. If htaccess is supported, you may also want to ask if mod_rewrite is supported for future reference.
One important factor here... Is the there a tilde in your URL, i.e. www.somedomain.com/~yoursitename?