The singer is believed to have died from heart failure, his manager Michael Lippman said, according to the UK-based Press Association.
Michael's death, which is being treated as "unexpected but not suspicious" by police, was also confirmed by the singer's family.
"It is with great sadness that we can confirm our beloved son, brother and friend George passed away peacefully at home over the Christmas period," his family said in a statement.
In a career spanning four decades, the British pop singer sold over 100 million albums and had many chart-topping hits, including "Careless Whisper," "Faith," and "Father Figure."
After enjoying early success in the duo Wham! alongside friend Andrew Ridgeley, he built a solo career which catapulted him to further stardom, awards and riches.
Ridgeley was one of the first to react to the news, tweeting that he was "heartbroken."
Many other stars paid tribute as well.
"You were such an inspiration. I'm honored to have not only been your fan, but a friend as well," said singer Mariah Carey on Twitter.
Singer Bryan Adams tweeted: "Such an incredible singer and a lovely human being, far too young to leave us."
Comedian Ellen DeGeneres, who like Michael came out publicly as gay in the late 1990s, said the singer "was such a brilliant talent. I'm so sad."
The two-time Grammy Award recipient "became one of the most beloved pop craftsmen and respected entertainers," said Neil Portnow, president and CEO of the Recording Academy, which awards the Grammys.
"From the enormous success he achieved with pop duo Wham! to his influential solo career, his extraordinary talent had a profound impact on countless entertainers worldwide, and his creative contributions will live on forever," Portnow said in a statement.
Music world in mourning
Reaction continued to pour in after the announcement of Michael's death.
British singer Robbie Williams
was left stunned by the news, writing, "Oh God no...I love you George...Rest in peace."
Boy George, who fronted the '80s British band Culture Club, said Michael's death was "devastating."
"I am thinking of @GeorgeMichael's family, friends and fans right now," he wrote in a statement posted on Twitter.
"He was so loved and I hope he knew it because the sadness today is beyond words," Boy George added. "What a beautiful voice he had and his music will live on as a testament to his talent. I can't believe he is gone. I hope the Buddha will hold him in his arms."
Holly Johnson, lead singer of Frankie Goes To Hollywood, said: "Sad to hear the news about George Michael, and so many great singers and songwriters we lost this year."
Music contemporaries Spandau Ballet said: "We are incredibly sad at the passing of our dear friend George Michael. A brilliant artist & great songwriter."
Michael's death comes at the end of a year that has seen the passing of several music superstars, including David Bowie, Prince and Leonard Cohen.
Simply Red said: "Its hard to take in. One of our most talented singer songwriters has left us. RIP George Michael. Such sad, tragic news. 2016 please end."
Matt Goss, singer in the band Bros, said: "George Michael was part of the tapestry of my life. His songs his lyrics & his melodies, True pop royalty! Heartbroken, RIP dearest George."