Blatty passed away Thursday evening at a hospital in Bethesda, Maryland, his widow, Julie Alicia Blatty, told CNN. He was 89.
"It was multiple myeloma, a form of blood cancer. He was only diagnosed last month," she said. "We were married for 33 years."
Blatty is best known for the 1971 New York Times best-seller "The Exorcist" and the film adaption of the novel, released in 1973, on which he served as producer and writer.
The horror story was about a child, played by actress Linda Blair, who was possessed by a demon.
The movie version was nominated for 10 Academy Awards, winning for best sound and best adapted screenplay.
"This film, when it came out, lived at the very center of popular culture," film critic and author Richard Crouse told CNN in 2013, on the 40th anniversary of its release.
Set in the Georgetown area of Washington, "The Exorcist" tells the story of 12-year-old Regan MacNeil, whose disturbing behavior prompts her mother to seek an exorcism after medical doctors are unable to help her daughter. The story is loosely based on an actual event.
Besides gruesome special effects, including vomiting and head-spinning, moviegoers were gripped by the theme song composed by Michael Oldfield.
The film's director, William Friedkin, tweeted Friday morning, "William Peter Blatty, dear friend and brother who created The Exorcist passed away yesterday."
Fellow author Stephen King tweeted, "RIP William Peter Blatty, who wrote the great horror novel of our time. So long, Old Bill."
Blatty's widow told CNN, "He was the most generous, loving, hysterical husband, father and grandfather. I was just profoundly blessed to be married to him. He was a wonderful man."
Blatty wasn't only interested in scaring audiences, his widow told CNN. "He had a big heart and he was very, very funny."
He co-wrote the screenplay for the 1964 film "A Shot in the Dark," one of the Pink Panther series with Peter Sellers. "He had such a whimsical sense of humor. We laughed a lot together," his widow said.
She said that in lieu of flowers, donations may be made to the LC Pastoral Services of the Legionaries of Christ and the organization Solidarity with the Persecuted Church. The family hasn't announced funeral plans.