Nicolas Sarkozy, France's president, paid tribute to Ponticelli and said a national commemoration to all of France's participants in the war would be held in the coming days.
Sarkozy said: "I express today the profound emotion and infinite sadness of the whole of the nation at the death of Lazare Ponticelli, last survivor of the French combatants of the First World War."
Ponticelli, who described war as "idiotic", had initially refused an offer of a state funeral made by Jacques Chirac, the former president, saying it would be an insult to the men who had died without commemoration.
However, he relented after Cazenave's death, saying he would accept a simple ceremony "in homage to my comrades".
Ponticelli's death severs the last living link with a conflict whose traces can still be seen in war memorials in nearly every town and village in France.
In a war fought largely on their home soil, some 8.4 million French soldiers served and about 1.3 million were killed in battles that transformed place names such as Verdun into by-words for horror and suffering.
Ninety years later, the Great War "poilu" in his sky-blue uniform still occupies a special place in the French imagination.
Ponticelli was born into a poor family on December 7, 1897, in the northern Italian town of Bettola and came to France as a nine-year-old, walking part of the way to save money.
He worked as a chimney sweep and newspaper boy before enlisting in the Foreign Legion when war broke out, saying later it was "a way of thanking" the country that had fed him.
He served at Soissons in Picardy, the Argonne region of north-east France and at Douaumont, near Verdun, on one occasion rescuing a wounded German and a wounded French soldier caught between the front lines.
Ponticelli took French citizenship in 1939, settling in the working class Paris suburb of Kremlin Bicetre, where he regulaly attended November 11 Armistice Day ceremonies.
"I was in all sorts of danger, during the war and at other times as well. We were all going to die," he said at an Armistice Day ceremony in 2007.