Steinbrenner, who turned 80 on July 4, suffered a massive heart attack Monday evening and was taken to St, Joseph's hospital in Tampa, where he died, the team's Web site reported.
Steinbrenner became principal owner of the Yankees in 1973 and the team won 11 American League pennants and seven World Series during his chairmanship.
He retired from active ownership in 2006, turning day-to-day duties of the ball club over to sons Hal and Hank.
"It is with profound sadness that the family of George M. Steinbrenner III announces his passing," the family said in a statement. "He passed away this morning in Tampa, Fla., at age 80.
"He was an incredible and charitable man, He was a visionary and a giant in the world of sports. He took a great but struggling franchise and turned it into a champion again."
Last October, the Yankees won the 2009 World Series, their first since 2000, defeating the Philadelphia Phillies in a six-game series.
Steinbrenner, who earned the nickname "The Boss," was a hard-driving businessman who made a fortune in the shipbuilding industry and then acquired fame as the flamboyant executive who led the restoration of the New York Yankees' baseball dynasty.
Born on July 4, 1930, he was the son of a prosperous shipowner in the Cleveland suburb of Bay Village, Ohio. He had a modest career as an athlete in college and served as an assistant football coach at two Big Ten colleges before joining the family business, the Kinsman Transit Co., in 1957. Kinsman ships had been sailing the Great Lakes since 1882 but had only eight vessels and little prestige compared with other bigger fleets.
It wasn't long, however, before other companies began to suspect the new admiral of the Kinsman fleet was Lord Nelson.
Steinbrenner plunged into the business with an energy and acumen that soon made a reputation in the industry. He became a part of a group that purchased the American Ship Building Co., and in 1967 became its chairman and chief executive officer. By 1972, the company's gross sales were more than $100 million annually.
Steinbrenner's energies overflowed into a wide variety of charities and fund-raising enterprises and then into horse racing and the theater. He became a general partner in Kinsman Racing Stables and the owner of the 860-acre Kinsman Stud Farm and in partnership with James Nederlander produced the road-show versions of "George M.," "On a Clear Day" and "Funny Girl" in addition to showing "Seesaw" and the 1970 Tony Award winner, "Applause," on Broadway.
Steinbrenner's career took the turn that was to catapult him into headlines when he learned in 1972 the Columbia Broadcasting System was interested in selling the Yankees. Steinbrenner worked out the deal with Michael Burke and on Jan. 3, 1973, it was announced that the Yankees had been purchased by a 20-man group of which Steinbrenner was the principal owner.
The Yankees, who had ruled the baseball world for more than 40 years beginning in 1921, hadn't won an American League pennant since 1964 but the new club president promised he would restore the club to its past glories. He plunged into the task with the characteristic energy, which quickly won him respect but earned him enemies. Then, only two months later, he became involved in the most embarrassing incident of his career.
For years a big fundraiser for the Democratic party, Steinbrenner wanted to curry favor with the Nixon administration and arranged a complicated contribution of about $300,000 to the Committee to Re-elect the President. He pleaded guilty on Aug. 23, 1974, to attempting illegally to cover up the contribution, and fined $15,000. He also was suspended by Baseball Commissioner Bowie Kuhn for two years.
The suspension was lifted 16 months later and Steinbrenner resumed his control of the Yankees' fortunes. With Steinbrenner spending freely in the free agent market and handing out huge long-term contracts to his players, the Yankees rapidly improved. They won their first pennant in 12 years in 1976, lost the World Series to the Cincinnati Reds in four straight games but then won the World Series in both 1977 and 1978.
Steinbrenner's autocratic methods, plus the complex personalities of Manager Billy Martin and players like Reggie Jackson, Thurman Munson, Mickey Rivers and Craig Nettles enabled the Yankees to make as much news off the field as on it. They feuded constantly in the clubhouse, with Steinbrenner and Martin adding to the confusion. The clubhouse became known as a "zoo" and the players undoubtedly were the most disliked as a group in the league.
Steinbrenner's problems with the erratic Martin reached a climax in July 1978 when the clubowner fired the manager. Martin was replaced by Bob Lemon, a Hall of Fame pitcher with Cleveland in the 1950s and a low-key personality. Under Lemon, the Yankees rallied from 14 games out of first place to win the pennant and a second straight World Series.
Before that rally ever happened, however, Steinbrenner had startled the sports world by announcing that Martin would return as the Yankees' manager in 1980. Martin subsequently was fired again and still later Steinbrenner played a bizarre game of managerial musical chairs involving Gene Michael, Lemon and Clyde King. Steinbrenner had 20 managerial changes in the first 23 years he ran the team, hiring and firing Martin five times.
As a boy of 13, Steinbrenner entered Culver Military Academy in Indiana. He was a hurdler and football halfback at Williams College, served in the Air Force for a brief period and then coached football and basketball at St. Thomas Aquinas High School in Columbus. In 1955, he became an assistant football coach at Northwestern and in 1956 and 1957 served as backfield coach at Purdue.
He was married to the former Joan Zieg and had four children.
Funeral arrangements will be private, the family said, but details of a public memorial were expected to be announced later.
Newt Gingrich fires back at Mandela backlash
Reindeer recovered after escaping from Santa during lighting ceremony