Rhodes, born Virgil Runnels, was 69. The WWE didn't give a cause or location of Rhodes' death.
Rhodes rose to fame as a rotund, easy-bleeding, easy talking-workin' man, a wrestler for the common man.
He didn't have the chiseled body some associate with today's wrestlers. He was a good-guy wrestler, often battling heels like Superstar Billy Graham, Blackjack Mulligan, Harley Race and The Four Horsemen, who were led by Ric Flair.
"My mentor @WWEDustyRhodes. Much love to your family and more respect than can ever be measured. Love you Dream," Flair tweeted.
Rhodes liked to pitch himself as the son of a plumber from Austin, Texas, and an everyman who became the extremely popular champion of the National Wrestling Alliance three times in the 1970s and 1980s.
Rhodes told several newspapers that he was digging a ditch in 1974 with a friend of his father's when the man helped him come up with the "American Dream" moniker.
The nickname came several years into a career that started slowly.
Rhodes told the St. Petersburg Times in 1989 that he grew up going to matches in Austin on Saturday with his father. After playing football in college, he broke into the business in Texas.
In his first match he fought Reggie Parks and was paid $15 for a 20-minute match that ended in a draw.
"I was glad to get outta there," Rhodes told the Florida paper. "But from then on, I knew, I knew, that's what I wanted to do."
He eventually would team with Dick Murdoch in 1968 as the Texas Outlaws, a bad-guy tag team known to cheat their opponents.
Back then, there were several wrestling circuits, and Rhodes kept a busy schedule before emerging as a star in Florida for the NWA and eventually World Championship Wrestling.
He moved on to the World Wrestling Federation (now the WWE) in the '80s, and wrestled on several other circuits before coming back to the WWE in the mid-2000s.
He will be remembered for the spirited and often hilarious in-studio interviews he would give to wrestling commentators to promote upcoming matches.
"I have wined and dined with kings and queens, and I've slept in alleys and dined on pork and beans," he once exclaimed.
He is also remembered by longtime wrestling fans for the many scars on his forehead, from which he bled profusely during the early days of his career.
His former competitors mourned his death.
"Today wrestling world lost a great wrestler and unbelievable entertainer. I lost a good friend. RIP Dusty Rhodes," tweeted Ted DiBiase, a former WWE star.
"RIP MY BROTHER DUSTY RHODES. GOD BLESS YOU AND YOUR FAMILY FOREVER #RIPDUSTY," wrote the Iron Sheik.
Many fans recalled days when their fathers would take them to the arena to see Rhodes, often a star in the main event, or Saturdays when Rhodes was a fixture on television.
He was still involved in wrestling working for the WWE in their NXT development program. He was a coach to rising wrestlers and helped book their appearances.
Rhodes was inducted into the WWE Hall of Fame in 2007. He has two sons who wrestle professionally as Goldust (Dustin Runnels) and Stardust (Cody Runnels).
Dusty Rhodes last appeared on a wrestling broadcast in February unsuccessfully trying to play peacemaker between the two characters.