Coulson was 71.
She went back decades with "Twin Peaks" co-creator David Lynch, serving as an assistant director on his first feature film, "Eraserhead."
Lynch thought she would be perfect to portray a lumberjack's widow who believes that a log she carries with her has mystical qualities.
At one point, Coulson told authorities that the log had clues as to who might have killed Laura Palmer, the murder that set the series in motion.
The Log Lady showed up in a dozen episodes during the show's two-season run, offering cryptic advice.
The character made such an impact in pop culture that she was referenced in other TV series, and Coulson even returned to the role on the TV series "Psych" a few years ago.
Coulson was reportedly going to be in the upcoming new season of "Twin Peaks" on Showtime.
Lynch said in a statement that Coulson was "solid gold."
"She was always there for her friends. She was filled with love for all people, for her family,for her work," Lynch said. "She was a tireless worker. She had a great sense of humor. She loved to laugh and make people laugh. She was a spiritual person."
She worked behind the scenes on "Star Trek II: The Wrath of Khan" and performed for many years with the Oregon Shakespeare Festival in Ashland, Oregon.
The troupe said in a statement
Monday that she had cancer.
"Her generosity of spirit was only matched by her vibrancy as an actor; she shone onstage in her every appearance," the statement read. "We will miss her with all our hearts."