Mr Gorbachev took power in 1985 and introduced reforms, as well as opening up the Soviet Union to the world.
But he was unable to prevent the slow collapse of the union, and many Russians blamed him for the years of turmoil that ensued.
Outside Russia, he was widely respected, with the UN chief saying he had "changed the course of history".
"Mikhail Gorbachev was a one-of-a kind statesman," UN Secretary General Antonio Guterres said. "The world has lost a towering global leader, committed multilateralist, and tireless advocate for peace."
The hospital in Moscow where he died said he had been suffering from a long and serious illness.
In recent years, his health had been in decline and he had been in and out of hospital. In June, international media reported that he had been admitted after suffering from a kidney ailment, though his cause of death has not been announced.
He will be buried in Moscow's Novodevichy cemetery, the resting place of many prominent Russians. It is not clear whether he will receive a state funeral.
President Vladimir Putin sent his "deepest condolences", describing how Mr Gorbachev had had "a huge impact in the course of history".
"He deeply understood that reforms were necessary, he strove to offer his own solutions to urgent problems," the Russian leader said.
The two men had a strained relationship - their last meeting reportedly in 2006.
Most recently, Mr Gorbachev was said to have been unhappy with Mr Putin's decision to invade Ukraine, even though he had supported the annexation of Crimea in 2014.
In his tribute, UK Prime Minister Boris Johnson said he admired Mr Gorbachev's courage and integrity, adding: "In a time of Putin's aggression in Ukraine, his tireless commitment to opening up Soviet society remains an example to us all."
US President Joe Biden called him a "rare leader" and praised Mr Gorbachev as a unique politician who had the "imagination to see that a different future was possible" amid the tensions of the Cold War.
European Commission President Ursula von der Leyen praised him as a "trusted and respected leader" who "opened the way for a free Europe".
"This legacy is one we will not forget," she added.
Mr Gorbachev became general secretary of the Soviet Communist Party, and de facto leader of the country, in 1985.
At the time, he was 54 - the youngest member of the ruling council known as the Politburo, and was seen as a breath of fresh air after several ageing leaders. His predecessor, Konstantin Chernenko, had died aged 73 after just over a year in office.
Few leaders have had such a profound effect on the global order, but Mr Gorbachev did not come to power seeking to end the Soviet grip over eastern Europe. Rather, he hoped to revitalise its society.
The Soviet economy had been struggling for years to keep up with the US and his policy of perestroika sought to introduce some market-like reforms to the state run system.
Internationally he reached arms control deals with the US, refused to intervene when eastern European nations rose up against their Communist rulers, and ended the bloody Soviet war in Afghanistan that had raged since 1979.
Meanwhile, his policy of glasnost, or openness, allowed people to criticise the government in a way which had been previously unthinkable.
But it also unleashed nationalist sentiments in many regions of the country which eventually undermined the stability of the country and hastened its collapse.
In 1991, after a shambolically organised coup by communist hardliners failed, Mr Gorbachev agreed to dissolve the Soviet Union and left office.
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