Her son, David Lilienstein, told CBC News she died peacefully Wednesday night at home in Toronto, surrounded by friends and family.
He says she had a rare form of cancer that was diagnosed last October.
"She was just a normal everyday person that had a phenomenal sense of music inside her," said David Lilienstein, who described his mother as a wonderful grandmother and fabulous cook.
"Turn to your friends and your children and sing 'skinnamarinky dinky dink,'" he said, when asked how his mother's many fans should mark her passing.
Sang fun-loving songs
Born in Chicago in 1936, Lilienstein formed the popular singing group with Sharon Hampson and Bramwell (Bram) Morrison in Toronto in 1978.
The multi-award-winning recording artists won the hearts of Canadian kids and families with their fun-loving songs like as Skinnamarink and Peanut Butter.
The group also had a top-rated preschool show, Sharon, Lois & Bram's Elephant Show. It aired on TVO and CBC in Canada, and on Nick Jr. in the U.S. for nearly a decade, according to the show's official website.
The three became Order of Canada honorees in 2003.
While Hampson, 72, and Morrison, 74, continue to tour, Lilienstein retired in 1998 after the death of her husband, Ernest.
The 'magic of our childhoods'
Toronto city councillor Josh Matlow, who got to know the Lilienstein family when he worked to dedicate a Toronto park in Sharon, Lois and Bram's honour, says he grew up with the group's music.
"She, along with Bram and Sharon, were part of the magic of our childhoods. Their music played a very special role in so many of our lives. Even today, those of us who are in our 30s and 40s can still sing verbatim the lyrics of Skinnamarink,"' Matlow says.
"Lois dedicated her career to making children the world over so happy by her music. And I think I know that we are all grateful."
David Lilienstein says the family is planning a funeral ceremony, but is talking about holding more public celebrations later this summer.