Vice-President Nicolas Maduro broke the news on national television. Chavez died at 4:25 p.m. local time, Maduro said, though the exact cause of death was not released.
With tears running down his face, Maduro called on Venezuelans to be "dignified inheritors of the giant man" Chavez was.
Chavez, who was one of Latin America's highest-profile leaders since he swept into office in 1998, had been struggling with cancer for almost two years and had recently undergone surgery in Cuba.
Chavez's condition had worsened in recent weeks and the leader had been completely out of the public eye. This week, he contracted a "severe infection," Venezuela's Communications Minister Ernesto Villegas said.
Chavez won re-election in October 2012, defeating Henrique Capriles in a bitter campaign. Capriles attacked Chavez's government for issues including rampant violent crime and corruption, winning about 45 per cent of the popular vote in the process.
Maduro, a loyal spokesman for Chavez, is set to lead Venezuela. The opposition, however, is expected to contest Maduro in a snap election that it argues should have been called after Chavez was unable to be sworn in on Jan. 10 as the constitution stipulates.
Shortly after his re-election, Chavez flew to Cuba for cancer treatment. It was his second major bout with the disease.
The Venezuelan government released a "proof of life" photo of Chavez in a Cuban hospital bed, smiling, with his daughters at his side, but the status of his recovery remained unclear. Chavez returned to Venezuela in February, but remained hidden from public view.
The government said Chavez was undergoing "chemotherapy of strong impact."
Chavez — a close friend of Cuban leader Fidel Castro — was known as an antagonist to the American government, though former Canadian Prime Minister Jean Chrétien remembered him fondly on CBC-TV's Power and Politics.
"He was a very colourful politician who had very different policies than many of us, but I had the privilege to meet him many times," Chrétien said.
"He did his best, even if we did not agree many times on the issues."
International community responds
Prime Minister Stephen Harper released a statement offering his condolences to Venezuela's citizens.
"At this key juncture, I hope the people of Venezuela can now build for themselves a better, brighter future based on the principles of freedom, democracy, the rule of law and respect for human rights," the statement said.
U.S. President Barack Obama also issued a statement Tuesday.
"At this challenging time of President Hugo Chavez's passing, the United States reaffirms its support for the Venezuelan people and its interest in developing a constructive relationship with the Venezuelan government," it said.
Other U.S. politicians, like California Republican Congressman Ed Royce, were less than kind.
“Hugo Chavez was a tyrant who forced the people of Venezuela to live in fear," Royce said. "His death dents the alliance of anti-U.S. leftist leaders in South America. Good riddance to this dictator."
Some 190,000 Venezuelans, many of whom are anti-Chavez, live in the U.S.
UN Secretary General Ban Ki-moon extended his condolences to Chavez's family and the country of Venezuela, while Vitaly Churkin, Russia's ambassador to the UN, called Chavez's death "a tragedy."
Venezuela's leadership calls for calm
Opposition leader Capriles issued two tweets following Chavez's death, one offering his sympathy to Chavez's family and supporters and a second calling for solidarity among Venezuelans.
"In difficult times we must show our deep love and respect for our Venezuela!" Capriles tweeted, in Spanish.
Diego Molero, Venezuela's defence minister, said the military will remain loyal to the constitution in the wake of Chavez's death.
Admiral Molero appealed for "unity, tranquility and understanding" among Venezuelans, as the country finds itself without the man who led the country for more than 14 years.
Photojournalists in Venezuela captured images of riot police on the streets of Caracas, though the mourning has remained mostly peaceful. Shops and restaurants closed early in the capital and many Venezuelans hustled for home, some even breaking into a run.
"I feel a sorrow so big I can't speak," Yamilina Barrios, a 39-year-old clerk who works in the Industry Ministry, told The Associated Press, with her face covered in tears.
"He was the best this country had," she said.
In the only immediately known incident of political violence, a group of masked, helmeted men on motorcycles, some brandishing revolvers, attacked about 40 students who had been protesting for more than a week near the Supreme Court building to demand the government give more information about Chavez's health.
The attackers, who wore no clothing identifying any political allegiance, burned the students' tents and scattered their food just minutes after the death was announced.