A spokesman said Mr Meles had died in a hospital abroad - but did not specify where or give details of his ailment.
Speculation about his health mounted when he missed an African Union summit in Addis Ababa last month.
Mr Meles took power as the leader of rebels that ousted communist leader Mengistu Haile Mariam in 1991 and led the country's economic transformation.
He was austere and hardworking, with a discipline forged from years spent in the guerrilla movement - and almost never smiled, says Elizabeth Blunt, the BBC's former correspondent in Addis Ababa.
Kenya's Prime Minister Raila Odinga told the BBC he feared for the stability of Ethiopia following Mr Meles' death. He said the situation in the country was fragile and ethnic violence continued to be a threat.
But Liberian President Ellen Johnson Sirleaf, who called Mr Meles an "intellectual leader for the continent", said she was confident his successors would be supported by leaders in the region.
'Sudden infection'
Ethiopia's Council of Ministers announced "with great sadness the untimely death of Prime Minister Meles Zenawi" in a statement, state TV reported.
"The premier [had] been receiving medical treatment abroad for the past two months and his health was improving, but due to a sudden infection which occurred [on Sunday], he went back to hospital for emergency treatment, and even if a lot of medical attention was given by his doctors, he died yesterday [Monday] at around 23:40," the statement said.
Deputy Prime Minister Hailemariam Desalegn, who is also Ethiopia's foreign minister, will be acting head of government.
A period of mourning had been declared until the funeral, government spokesman Bereket Simon told reporters. No timing has been announced.
Mr Bereket said the prime minister had struggled with illness for a year, but he had continued to work regardless.
Mr Bereket insisted Ethiopia was stable and "everything will continue as charted" by the late prime minister.
This theme was echoed by state television, which stated that "even if Ethiopia has been badly affected for missing its great leader, Prime Minister Meles Zenawi initiated fundamental policies and strategies which will be further strengthened".
It broadcast footage of Mr Meles accompanied by solemn instrumental music.
Mr Meles had not been seen in public for some eight weeks prior to his death, and was reported to have been admitted to hospital in July.
Three weeks ago, spokesman Mr Bereket dismissed reports he was critically ill. At the time he declined to give any details about Mr Meles' whereabouts or what he was suffering from.
Some reports suggested Mr Meles was in hospital in Belgium, suffering from a stomach complaint. Other reports said he was in Germany.
Rights concerns
Ethiopia's economy has grown rapidly in recent years, despite the secession of Eritrea and the subsequent war between the two countries.
Under Mr Meles, Ethiopia became a staunch US ally, receiving hundreds of millions of dollars in aid over the years, and hosting the US military drones that patrol East Africa.
He won accolades from the West for sending troops to battle Islamist militants in Somalia, says the BBC's James Copnall.
But concern had been growing about the lack of democracy and human rights in Ethiopia, our correspondent in the region says.
At least 200 people died in the violence that followed the 2005 elections, and many journalists and politicians have been locked up.

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