Al-Hodeiby, the Brotherhood's sixth "supreme guide", died at the age of 83 following an unspecified illness.
Known for his strong personality and organisational abilities, he only took over in November 2002 on the death of his predecessor, Mustafa Mashhur.
At the time al-Hodeiby won the day against younger generations, made up of academics and intellectuals in their 50s, who were impatiently waiting to take over.
A key candidate for the succession will be Essam Abd al-Moneim, a doctor in his 50s, who has been a Brotherhood activist for the past three decades.
A rift has emerged between older members who advocate a stricter line and those who admire the Turkish Islamist model based on democratic methods.
Since "moderate" Islamists came to power in secular Turkey in late 2002, the younger cadres have been closely following political developments in Ankara.
The Muslim Brotherhood represents the main opposition force in Egypt, with 16 deputies in the 454-seat National Assembly.
But because of the movement's officially banned status the MPs did not run under the Brotherhood's banner.
Despite being banned for almost half a century, Egypt's Muslim Brotherhood has managed to keep its networks active, especially in the universities and mosques.
"The absence of al-Hodeiby will lead to a critical phase within the movement concerning the succession to the post of spiritual guide and his deputy. But this time the movement could have a guide from the middle generation, or those in their 50s, who now make up a majority"
Al-Ahram studies centre
The group has survived multiple waves of arrests within its ranks, who advocate the creation of an Islamic state through peaceful means.
"The absence of al-Hodeiby will lead to a critical phase within the movement concerning the succession to the post of spiritual guide and his deputy," Rashwan, a political specialist at Al-Ahram studies centre, said.
"But this time the movement could have a guide from the middle generation, or those in their 50s, who now make up a majority."
No date has been set for a successor to be designated, and the selection process remains unknown.
Under the statutes, the supreme guide should be co-opted by the Majlis al-Shura assembly of around 80 members.
But a formal meeting of the assembly could prove difficult, especially as the movement fears it could allow Egyptian authorities to make multiple arrests of the leadership.
If the assembly fails to convene within 60 days of the post being left vacant, the appointment would be left to the 13-member leadership bureau which lays down the political line.
The Brotherhood's spiritual guide has authority over not only the Egyptian branch of the movement, but also the Jordanian, Syrian and Palestinian branches as well as others in the Arab countries and Europe.