Gorbachev, the last Soviet president, forged arms reduction deals with the United States and partnerships with Western powers to remove the Iron Curtain that had divided Europe since World War Two and bring about the reunification of Germany.
"Mikhail Gorbachev passed away tonight after a serious and protracted disease," Russia's Central Clinical Hospital said in a statement.
Russian President Vladimir Putin expressed "his deepest condolences" on Gorbachev's death, Kremlin spokesman Dmitry Peskov told Interfax news agency.
"Tomorrow he will send a telegram of condolences to his family and friends," he said.
Putin said in 2018 he would reverse the collapse of the Soviet Union if he could, news agencies reported at the time.
In 2005, Putin called the event the "greatest geopolitical catastrophe" of the twentieth century.
After decades of Cold War tension and confrontation, Gorbachev brought the Soviet Union closer to the West than at any point since World War II.
But he saw that legacy wrecked in the final months of his life, as Putin's invasion of Ukraine brought Western sanctions crashing down on Moscow, and politicians in both Russia and the West began to speak openly of a new Cold War.
"Gorbachev died in a symbolic way when his life's work, freedom, was effectively destroyed by Putin," said Andrei Kolesnikov, senior fellow at the Carnegie Endowment for International Peace.
Gorbachev won the Nobel Peace Prize in 1990.
Gorbachev will be buried in Moscow's Novodevichy Cemetery next to his wife Raisa, who died in 1999, said Tass news agency, citing the foundation that the former Soviet leader set up once he left office.
When pro-democracy protests swept across the Soviet bloc nations of communist Eastern Europe in 1989, he refrained from using force - unlike previous Kremlin leaders who had sent tanks to crush uprisings in Hungary in 1956 and Czechoslovakia in 1968.
But the protests fuelled aspirations for autonomy in the 15 republics of the Soviet Union, which disintegrated over the next two years in chaotic fashion.
Gorbachev struggled in vain to prevent that collapse.
"The era of Gorbachev is the era of perestroika, the era of hope, the era of our entry into a missile-free world ... but there was one miscalculation: we did not know our country well," said Vladimir Shevchenko, who headed Gorbachev's protocol office when he was Soviet leader.
"Our union fell apart, that was a tragedy and his tragedy," RIA news agency cited him as saying.
On becoming general secretary of the Soviet Communist Party in 1985, aged just 54, he had set out to revitalise the system by introducing limited political and economic freedoms, but his reforms spun out of control.
His policy of "glasnost" - free speech - allowed previously unthinkable criticism of the party and the state, but also emboldened nationalists who began to press for independence in the Baltic republics of Latvia, Lithuania, Estonia and elsewhere.
Many Russians never forgave Gorbachev for the turbulence that his reforms unleashed, considering the subsequent plunge in their living standards too high a price to pay for democracy.
"He gave us all freedom - but we don't know what to do with it," liberal economist Ruslan Grinberg told the armed forces news outlet Zvezda after visiting Gorbachev in hospital on June 30.
"Gorbachev lived to see some of his worst fears realised and his brightest dreams drowned in blood and filth. But he will be remembered fondly by historians, and one day - I believe it - by Russians," said Cold War historian Sergey Radchenko.
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