The three-time world heavyweight champion, who had battled Parkinson's disease for 32 years, was admitted to hospital with a respiratory condition earlier in the week.
His family's spokesman Bob Gunnell confirmed Ali's death in Phoenix, Arizona, on Friday evening.
The funeral will take place in Ali's home town of Louisville, Kentucky.
The spokesman said the Ali family "would like to thank everyone for their thoughts, prayers and support" and asked for privacy.
Ali, hailed as "The Greatest"
after winning the heavyweight championship of the world three times, is
survived by his fourth wife Lonnie - whom he married in 1986 - and
multiple children, many of whom were reported to have flown to their father's bedside on Thursday and Friday
He had been admitted to hospital most recently in early 2015 when he was
treated for a severe urinary tract infection initially diagnosed as
pneumonia. At his last public appearances, he looked increasingly frail, including
on April 9 when he wore sunglasses and was hunched over at the annual
Celebrity Fight Night dinner in Phoenix, which raises funds for
Parkinson's treatment.
Ali has suffered from Parkinson's for three decades and trembled badly while lighting the Olympic torch in 1996 in Atlanta.
Doctors say the illness was probably caused by the thousands of
punches Ali took during a career in which he travelled the world for big
fights.
Tributes quickly flooded in for Ali, born Cassius Clay, as news of his death broke.
George Foreman, Ali's friend and rival from the famous "Rumble in the
Jungle" fight, said: "We were like one guy - part of me is gone.He said he wanted Ali to be remembered as a "brave" humanitarian and not just a boxer.
He said: "Muhammad Ali was one of the greatest human beings I have
ever met. No doubt he was one of the best people to have lived in this
day and age.
"To put him as a boxer is an injustice."
A legend forever
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