The company said Thursday that Dolby died in his home at San Francisco. He had been living with Alzheimer's disease for several years and was diagnosed with acute leukemia this summer.
Dolby founded his namesake company in 1965 and grew it into an industry leader in audio technology. His work in noise reduction and surround sound led to the creation of a number of technologies that are still used in music, movies and entertainment today. The innovations also turned Dolby into a rich man with an estimated fortune of $2.3 billion, according to Forbes magazine.
"Today we lost a friend, mentor and true visionary," Kevin Yeaman, president and CEO of Dolby Laboratories, said in a statement.
Yeaman said that Dolby invented an entire industry around delivering an experience in sound. His work ranged from helping to reduce the hiss in cassette recordings to bringing "Star Wars" to life on the big screen in Dolby Stereo.
Dolby held 50 U.S. patents and won a number of notable awards for his life's work, including several Emmys, two Oscars and a Grammy.
He was awarded the National Medal of Technology from President Bill Clinton and was inducted into the National Inventors Hall of Fame in the U.S. and the Royal Academy of Engineers in the U.K., among other honours. In 2012, the theatre that serves as home to the Academy Awards was renamed the Dolby Theatre and the Ray Dolby Ballroom was named in his honour.
"Ray really managed to have a dream job," said Dagmar Dolby, his wife of 47 years. "Because he could do exactly what he wanted to do, whichever way he wanted to do it, and in the process, did a lot of good for many music and film lovers. And in the end, built a very successful company."
Dolby was born in Portland, Ore., and his family eventually moved to the San Francisco peninsula. It was there that he started his professional work at Ampex Corp. working on videotape recording systems while he was still a student.
After graduating from Stanford University, he left Ampex to study at Cambridge University. Following his time as a United Nations adviser in India, he returned to England and founded Dolby in London. In 1976, he moved to San Francisco where the company established its headquarters.
Dolby's co-workers described him as inspiring and thoughtful man, who cared passionately about engineering.
"To be an inventor, you have to be willing to live with a sense of uncertainty, to work in the darkness and grope toward an answer, to put up with the anxiety about whether there is an answer," Dolby once said.
He is survived by his wife, Dagmar, his sons, Tom and David, their spouses, Andrew and Natasha, and four grandchildren.
Dolby and his wife were active in philanthropy and supported numerous causes and organizations. The Ray and Dagmar Dolby Regeneration Medicine Building at the University of California, San Francisco's Stem Cell Center and the Brain Health Center at California Pacific Medical Center were opened with their support.
His family described Dolby as generous, patient, curious and fair.
"Though he was an engineer at heart, my father's achievements in technology grew out of a love of music and the arts," said Tom Dolby, son, filmmaker and novelist. "He brought his appreciation of the artistic process to all of his work in film and audio recording."