The news was announced by his former club Chelsea on Wednesday afternoon.
It had been reported that Wilkins, who played for clubs including Chelsea, Manchester United and AC Milan, was critically ill following a heart attack.
Chelsea described Wilkins as a "popular and much-loved figure" who was "widely regarded by the many people who met him as one of the nicest guys in football, possessing a wonderful turn of phrase and a contagious love for the sport". You will be sadly missed!
A statement from the 61-year-old's family confirmed that he passed away this morning.
Wilkins served Chelsea as a player, coach and assistant manager and played for and managed QPR.
"Our thoughts are with Ray's wife Jackie, children Ross and Jade, and the rest of his family at this sad time".
Wilkins returned to management at Fulham in 1997, with former England colleague Keegan as "chief operating officer" at Craven Cottage under the new big-spending regime of Mohamed Al-Fayed.
He played in Milan for three years before a short stint at Paris Saint-Germain.
During his career as a player, Wilkins won the FA Cup with Manchester United in 1983, scoring a memorable goal in the first tie against Brighton at Wembley, which ended 2-2.
He made 84 appearances for England and captained his country 10 times.
Manchester United tweeted: "The thoughts and prayers of everyone at Manchester United are with the family, friends and colleagues of our former midfielder Ray Wilkins, following his tragic passing".
He represented the England national team 86 times and was inducted into the English Football Hall of Fame in 2013.
Gary Lineker led the tributes to Wilkins, writing: "Deeply saddened to hear that Ray Wilkins has passed away".
He played in the European Championships in Italy in 1980, scoring a brilliant lob in the opening 1-1 draw with Belgium, but England failed to progress from the group, their prospects damaged by a 1-0 loss to the hosts.
Ex Man United keeper Peter Schmeichel wrote: "Sad and chocked to hear of the passing of Ray Wilkins".
"No teammate was more helpful and supportive".