The straight-talking Mujica, known to many Uruguayans by his nickname "Pepe", led the small farming country's leftist government from 2010 to 2015 after convincing voters his radical past was a closed chapter.
"It is with deep sorrow that we announce the death of our comrade Pepe Mujica," President Yamandu Orsi said in a post on X. "Thank you for everything you gave us and for your deep love for your people."
As president, Mujica adopted what was then a pioneering liberal stance on issues related to civil liberties. He signed a law allowing gay marriage and abortions in early pregnancy, and backed a proposal to legalise marijuana sales.
The gay marriage and abortion measures were a big shift for Catholic Latin America, and the move on marijuana was at the time almost unprecedented worldwide.
Regional leaders, including leftist presidents in Brazil, Chile and Mexico, mourned Mujica's passing and praised his example.
"He defended democracy like few others. And he never stopped advocating for social justice and the end of all inequalities," said Brazilian President Luiz Inacio Lula da Silva. Mujica's "greatness transcended the borders of Uruguay and his presidential term", he added.
During his term in office, Mujica refused to move to the presidential residence, choosing to stay in his modest home where he kept a small flower farm in a suburb of Montevideo, the capital.
Shunning a formal suit and tie, it was common to see him driving around in his Beetle or eating at downtown restaurants where office workers had lunch.
Mujica was 74 when he became president. He was elected with 52 per cent of the vote, despite some voters' concerns about his age and his past as one of the leaders of the Tupamaros rebel group in the 1960s and 1970s.
Lucia Topolansky was Mujica's long-term partner, dating back to their days in the Tupamaros. The couple married in 2005, and she served as vice president from 2017-2020.
Jose Mujica's birth certificate recorded him as born in 1935, although he claimed there was an error and that he was actually born a year earlier. He once described his upbringing as "dignified poverty".
In the late 1960s, he joined the Marxist Tupamaros guerrilla movement, which sought to weaken Uruguay's conservative government through robberies, political kidnappings and bombings.
Mujica later said that he had never killed anyone but was involved in several violent clashes with police and soldiers and was once shot six times.
Uruguay's security forces gained the upper hand over the Tupamaros by the time the military swept to power in a 1973 coup, marking the start of a 12-year dictatorship in which about 200 people were kidnapped and killed. Thousands more were jailed and tortured.
Mujica spent almost 15 years behind bars, many in solitary confinement, lying at the bottom of an old horse trough with only ants for company. He managed to escape twice, once by tunnelling into a nearby house. His biggest "vice" as he approached 90, he later said, was talking to himself, alluding to his time in isolation.
When democracy was restored to the farming country of roughly three million people in 1985, Mujica was released and returned to politics, gradually becoming a prominent figure on the left.
He served as agriculture minister in the centre-left coalition of his predecessor, President Tabaré Vázquez, who would go on to succeed him from 2015 to 2020.
Mujica's support base was on the left, but he maintained a fluid dialogue with opponents within the centre-right, inviting them to traditional barbecues at his home.
"We can't pretend to agree on everything. We have to agree with what there is, not with what we like," he said.
