Preciado, who only agreed to take charge of the team on Wednesday, had a one-year deal and was set to be presented Friday at Villarreal. The team was relegated from the Spanish league last season.
Villarreal President Fernando Roig said the club will try to look after Preciado's family.
"We will give support to his family, and we will all try to respect their feelings and help them in this difficult moment," he said.
Preciado is a former player with several clubs including Racing Santander and had also previously coached teams including Racing, Levante, Murcia and Sporting Gijon.
The team said Preciado was in Valencia when he was stricken early Thursday.
"We are all shocked," Spain coach Vicente del Bosque said from Poland where he is preparing his team for the European Championship.
"We were having breakfast and we were all taken back by the news," he told Spanish radio Marca. "He was a caring person and a great sportsman. He was a man of football that was an honour to coaching."
Spain's internationals were also affected by Preciado's passing.
"The truth is that this is difficult to digest," said Chelsea forward Juan Mata at Spain's training base in Gniewino. "I always remember him smiling, as a happy person that transmitted his passion, joy and character to all his teams.
"Talking about him in the past tense is tough for me."
Preciado's sudden death led to an outpouring of emotional responses from Spanish clubs, coaches and players. Real Madrid was one of several teams to express its condolences to his family along with the Spanish football federation.
Madrid coach Jose Mourinho, who suffered his first home defeat in league play in nine seasons last year to Preciado's Sporting and with whom he had a public spat before later reconciling, said that Preciado "was always a dignified rival."
"He had everything I like in people and sportsmen: character, honesty and the courage to fight on," the Portuguese coach wrote in an open letter published on Madrid's website.
Mallorca coach Joaquin Caparros said he broke into tears on hearing the news.
"I was so happy for him joining Villarreal," he said. "I am sure he would have taken it back to the first division. He should be a reference in the world of coaching."
Preciado, a native of the Cantabria region in northern Spain, began coaching in the third division in 1995. He led Levante from the second to the first division in the 2003-04 season, and also guided Sporting back to the topflight for the first time in ten years in 2007-08.
He coached Sporting for a total of five and a half seasons before a poor start last year led to him being fired midway through the season. Sporting did not recover and was relegated, along with Villarreal and Racing.
Preciado was a fan favourite in Gijon and one of the most charismatic managers in Spain, known for his frank and entertaining manner of addressing both press and players alike.
Preciado's 232 games for Sporting were second only to Jose Diaz Novoa's 282. Sporting said Preciado's name was "written into the history of the club in golden letters."
As a player, he also had stints with Mallorca, Alaves, Ourense, Linares and Gimnastic de Torrelavega.
For Villarreal, the tragedy overshadows a dire season marked by injuries to key players, including striker Giuseppe Rossi, which saw it fall from playing in the Champions League to relegation that was confirmed in the closing minutes of the final round.