The African nation's state-run television reported that: "Prime Minister Zenawi suddenly passed away last night. Meles was recovering in a hospital overseas for the past two months but died of a sudden infection at 11:40."
Speculation that Meles (57) was seriously ill grew after he failed to attend an African Union summit in the Ethiopian capital Addis Ababa last month.
State media said Deputy Prime Minister Hailemariam Desalegn would be the acting prime minister.
Ethiopia's government said last month that Meles was taking a break to recover from an unspecified condition. Diplomats in Addis Ababa had said Meles was being treated in Brussels from an undisclosed illness, while others said he was in Germany.
Meles has been in power since ousting Mengistu Haile Mariam's military junta in 1991. He served as president from 1991 to 1995, when he became prime minister.
He won praise in the West for helping spur economic growth and for his army's support against al-Qaeda-linked militants in neighbouring Somalia.
But he also has been accused of crushing dissent, using national security concerns as an excuse to silence opposition figures and journalists. The government has dismissed those accusations.
Born Legesse Zenawi in Tigray Province in the north of the country in 1955, he later took the name Meles in honour of a comrade who died in the revolutionary struggle.
He studied in Addis Ababa and at universities in Britain and the Netherlands, turning to political activism while still a student.
Following the deposal of Emperor Haile Selassie in 1974 and the establishment of a communist dictatorship under Mengistu Haile Mariam – known in Ethiopia as the period of "Red Terror" – Zenawi joined the newly founded Tigrayan People's Liberation Front (TPLF).
With assistance from the Eritrean People's Liberation Front (EPLF), at a time when Eritrea was still part of Ethiopia, the opposition movement succeeded in toppling Mengistu's regime in 1991 as its Soviet backing dissipated.
Zenawi became prime minister after elections in 1995, holding office for 17 years, despite frequent criticism of the way the elections were conducted.
His alliance with the EPLF fall apart and in 1998 a two-year war broke out between Ethiopia and the newly independent Eritrea, costing two of the world's poorest countries tens of millions of dollars and the lives of some 100 000 people.
The two nations continue to be arch rivals and there are occasional violent incidents along the border.
Inside Ethiopia, disturbances in 2005 were put down with more than 200 deaths and the mass arrest of opposition leaders.
Targeting political opponents
International organisations have frequently accused the Ethiopian government of the serial abuse of human rights, and have criticised a new anti-terrorism law used to target political opponents.
But Ethiopia has also experienced an unprecedented economic boom under Zenawi, in part owing to massive inflows of foreign aid and investment, and despite repeated episodes of drought and famine.
The country in 2008 had the fastest growth rate of any non-oil-dependent economy in Africa.
Poverty in both rural and urban areas remains rife. Ethiopia is ranked by the UN as one of the least-developed nations in the world.
The country's military under Zenawi was also active in lawless neighbouring Somalia, sending troops to help fight Islamist groups, and gaining the prime minister strong ties to Western leaders.
Zenawi had announced that he would not be seeking re-election in 2015. – Reuters, Sapa