His family released a statement in the early hours of Wednesday confirming his death at his home in Cambridge.
"We are deeply saddened that our beloved father passed away today. He was a great scientist and an extraordinary man whose work and legacy will live on for many years," Hawking's children said in a statement.
"His courage and persistence with his brilliance and humour inspired people across the world. He once said, It would not be much of a universe if it wasn't home to the people you love.' We will miss him for ever," the statement added.
Hawking is survived by three children -- Robert, Lucy and Timothy -- from his first marriage to Jane Wilde, and three grandchildren.
The physicist was born on January 8, 1942 in Oxford, England.
Known the world over for his acclaimed book "A Brief History of Time: From the Big Bang to Black Holes", Hawking was diagnosed with amyotrophic lateral sclerosis (ALS) -- a progressive neuro-degenerative disease -- in 1963 at age 21, The Guardian newspaper said.
Hawking's doctors gave him nearly two years to live but he defied medical history and survived for decades.
For the rest of his life, the physicist used a wheelchair to move around and a speech synthesizer that allowed him to speak in a computerised voice with an American accent.
For Hawking, the early diagnosis of his terminal disease ignited a fresh sense of purpose.
"Although there was a cloud hanging over my future, I found, to my surprise, that I was enjoying life in the present more than before. I began to make progress with my research," he once said, the paper reported.
"My goal is simple. It is a complete understanding of the universe, why it is as it is and why it exists at all," Hawking added.
With fellow physicist Roger Penrose, Hawking merged Einstein's theory of relativity with quantum theory, suggesting that space and time began with the Big Bang and end in black holes.
In 1974, Hawking proposed what is known as his most significant theory that black holes can emit sub-atomic particles.
Published for the first time in 1988, "A Brief History of Time" stayed on the Sunday Times bestsellers list for an unprecedented 237 weeks. It sold 10 million copies and was translated into 40 different languages.
Hailed as one of the most brilliant theoretical physicists since Albert Einstein, Hawking never won a Nobel Prize.
In India, President Ram Nath Kovind, Prime Minister Narendra Modi and Science Minister Harsh Vardhan condoled the demise of Hawking.
"Sad to hear of the passing of scientist Stephen Hawking. His brilliant mind made our world and our universe a less mysterious place. And his courage and resilience will remain an inspiration for generations," Kovind said in a tweet.
Modi also took to Twitter to pay tribute to Hawking and said: "Professor Stephen Hawking was an outstanding scientist and academic".
It was January 2001 when Hawking came to India for the first time, later describing the 16-day long tour as "magnificent".
In the first leg of the tour in Mumbai, Hawking addressed an international physics seminar at the Tata Institute of Fundamental Research (TIFR). The physicist also celebrated his 59th birthday at the Oberoi Towers hotel where he stayed.
In New Delhi, Hawking met then President K.R. Narayanan at Rashtrapati Bhavan who later described the 45-minute meeting with the British physicist as "an unforgettable experience".
The US space agency NASA tweeted: "Remembering Stephen Hawking, a renowned physicist and ambassador of science. His theories unlocked a universe of possibilities that we & the world are exploring. May you keep flying like superman in microgravity, as you said to astronauts on @Space_Station in 2014".
"We lost a great one today. Stephen Hawking will be remembered for his incredible contributions to science -- making complex theories and concepts more accessible to the masses," tweeted Microsoft CEO Satya Nadella.
Astrophysicist Dr Karan Jani, who works for the Laser Interferometer Gravitational-Wave Observatory (LIGO), wrote: "The courage for a career in astrophysics happened due to Brief History of Time - a used copy that I got from a street vendor in my small town of [India] 12 yrs ago."
"A loss for all humanity. RIP Stephen Hawking," tweeted American astronaut Scott Kelly.
The physicist's inspiring story gave birth to the 2014 movie "The Theory of Everything," which was based on a memoir by Hawking's first wife Wilde. Actor Eddie Redmayne's portrayal of Hawking in the film won him an Oscar for Best Actor.
From Hollywood to Bollywood, condolences poured in for Hawking.
While actor Eddie Redmayne remembered him as a "ladies man", the official Twitter account of "The Big Bang Theory", a TV series that witnessed appearances of the famed professor, also remembered him.
"RIP Stephen Hawking. A major loss to the scientific community and to the millions he inspired through his work and life. Condolences to the family," tweeted actor-producer Farhan Akhtar.
Oscar-winning sound designer Resul Pookutty said: "Remember to look up at the stars not down at your feet"! A sad day for all of us".