Meles Zenawi, who ruled Ethiopia for more than 20 years, has died while undergoing treatment for an undisclosed illness, according to Ethiopian state television.
It announced on Tuesday that the 57-year-old prime minister died from a sudden infection while recovering from the illness at a hospital abroad.
In a statement read on state TV, Simon Bereket, the information minister, said: "It's a sad day for Ethiopia, the man who led our country for the past 21 years and brought economic and democratic changes, has died. We have lost our respected leader.
"Meles has been receiving treatment abroad. He was getting better and we were expecting him to return to Addis Ababa. But he developed a sudden infection and died around 11:40pm last night.
"His body will be returned to Ethiopia soon. We have set up a committee to organise his funeral. More information will be released about that soon."
According to reports Zenawi's body has since arrived in Addis Adaba in readiness for burial.
State media said Hailemariam Desalegn, deputy prime minister, would be the acting prime minister.
Bereket said: "As per Ethiopian law, Hailemariam Desalegn has now taken over the leadership. He will also be in charge of the Ethiopian military and all other government institutions.
"I would like to stress, nothing in Ethiopia will change. The government will continue. Our policies and institutions will continue. Nothing will change in Ethiopia. Desalegn will be confirmed by parliament."
Earlier Al Jazeera's Peter Greste, reporting from Johannesburg in South Africa, said: "His death did not come as a surprise because Zenawi missed a couple of important public events."
Rumours about his public health started to rise during the African Union summit where he failed to appear.
"The question now is where does this leave the country. There are already rumours of power struggle in his absence. There is no clear succession plan in Addis Ababa. It is not certain who will replace Meles.
"I certainly cannot think of any political figure in Ethiopia at the moment that has his charisma, political savvy or his control over the country."
Zenawi had been in power since overthrowing Mengistu Haile Mariam's military junta in 1991.
He served as president from 1991 to 1995, when he became prime minister.
Zenawi was credited with Ethiopia's economic boom in the past decade, with economic growth shooting from 3.8 per cent in the 1990s to 10 per cent in 2010.
On the domestic front, Zenawi would regularly come under fire from human rights organisations who accused him of gross abuses against ethnic minorities, including Ethiopia's ethnic Somalis in the eastern Ogaden region where rebels have fought a long-running uprising.
Similar ethnic conflicts have boiled among the Oromo people in central Ethiopia, the Afar in the far east on the border with Eritrea, and the Anuak people near the border with South Sudan.
Zenawi would tolerate no criticism: in 2005, nearly 200 people died in a crackdown on demonstrations by the opposition, who accused Meles of rigging elections.
But some Ethiopians argued that he did what was necessary to stabilise the vast and ethnically diverse state.
The much criticised 2009 anti-terrorism law, which rights groups have said is far too vague and has been used to quash freedom of speech and peaceful political dissent, has seen multiple opposition figures and journalists, including two Swedes, jailed for lengthy terms.
In the wider region, Zenawi was never afraid to make full use of Ethiopia's powerful and well-equipped army.
After overseeing the independence of Eritrea from Ethiopia in 1993 - run by fellow ex-rebel fighters who had also fought to topple Mengistu - Zenawi returned to war, with a 1998-2000 border war leaving tens of thousands dead.
A peace deal led to a tense standoff, with Zenawi refusing to pull troops from the border town of Badme, even after an international court ruled the town belonged to Eritrea.
The town has been the source of festering discontent between the nations ever since.
Zenawi also invaded longtime Ethiopian foe Somalia, sending troops and tanks to topple an Islamist regime in 2006, before pulling out the following year in the face of guerrilla attacks.
He sent Ethiopian troops back into Somalia in 2011.
While Zenawi was regularly singled out by rights groups as one of the continent's worst human-rights predators, some Western observers took the pragmatic view that Ethiopia and the region needed Zenawi where he was.
Former US president Bill Clinton once called him a "renaissance leader", while a leaked 2009 US diplomatic cable described him as "quiet, deliberative and certainly not a 'man about town'", adding he was a "voracious reader and very introspective."
Unlike many of his fellow African leaders Zenawi never earned a reputation for having a taste for luxury.
In the final decade of his life he challenged the world's powerful and spearheaded an African push for more fairness in key climate change talks.
Speculation that Zenawi was seriously ill grew after he failed to attend an African Union summit in the Ethiopian capital, Addis Ababa, last month.
Diplomats in Addis Ababa had said he was being treated in Brussels for an undisclosed illness, while others said he was in Germany.
Ethiopia's government said last month that he was taking a break to recover from an unspecified condition.