He was 75.
Coutts was a lawyer, businessman and key figure within Canada's Liberal party.
He was secretary to Pearson between 1963 and 1966. He went on to serve as principal secretary to Trudeau between 1975 and 1981, and was regarded as one of the powerful figures in Ottawa during that period.
Coutts, who obtained a law degree from University of Alberta and an MBA from Harvard Business School, later became involved with several foundations and public policy organizations.
The High River, Alta.-native was named a member of the Order of Canada in 2001.
Coutts died of cancer late Tuesday, an advisor to current Liberal leader Justin Trudeau confirmed in an email.
Trudeau himself also took to Twitter in tribute.
"Starting 2014 on a sad note, my wise and good friend Jim Coutts lost his battle with cancer last night," he wrote on his official Twitter account on Wednesday.
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