King Fahd, Saudi Arabia's ruler since 1982, has died at the age of 84.
Saudi state television announced Crown Prince Abdullah, his half-brother, had been named as King Fahd's successor.
King Fahd had been frail since suffering a debilitating stroke in 1995 and had delegated the running of the kingdom to Crown Prince Abdullah.
Members of the royal family have pledged allegiance to Abdullah. An official ceremony confirming him as king is due to be held on Wednesday.
King Fahd's funeral is scheduled for Tuesday, while on Wednesday Saudi citizens will be able to pledge their loyalty to their new ruler at a palace in the capital, Riyadh.
Defence Minister Prince Sultan is next in line to the throne after Abdullah, his half-brother, and was named crown prince.
The king had been ill in hospital for two months and his passing away came as no surprise, says the BBC's Heba Saleh in Cairo.
The smooth succession of Crown Prince Abdullah, who has been the de facto ruler of the kingdom since the mid-90s when ill health confined King Fahd to a wheelchair, has also been widely expected, she adds.
'Sorrow and sadness'
"With all sorrow and sadness, the royal court in the name of his highness Crown Prince Abdullah bin Abdel Aziz and all members of the family announces the death of the servant of the two holy mosques, King Fahd bin Abdel Aziz," Minister of Information Iyad bin Amin Madani announced on state television.
"He died after suffering an illness. God now allows the custodian of the two holy mosques, King Fahd, with great mercy and forgiveness, to reside in his wide heaven."
KING FAHD FACTS
Born in Riyadh in 1921
Appointed education minister in 1953, then became interior minister, and later deputy prime minister and Crown Prince
Ascended to the throne in 1982
Added the title Custodian of the Two Holy Mosques to his name in 1986
Invited US troops into Saudi Arabia in 1990 to counter the threat of Iraqi invasion
Suffered a series of strokes in 1995
The king died early on Monday at the King Faisal Specialist Hospital in Riyadh, where he was admitted on 27 May for unspecified medical tests, the Associated Press (AP) news agency reports.
An extraordinary Arab summit due to be held Wednesday in the Egyptian resort of Sharm al-Sheikh has been postponed because of King Fahd's death.
Countries across the Middle East are holding periods of mourning.
President George Bush has spoken to King Abdullah to offer US condolences, and the US embassy has announced the three-day closure of its office in Riyadh and its consulates in Jeddah and Dhahran, the Associated Press has reported.
Other world leaders have responded to the news of King Fahd's death.
"King Fahd was a man of great vision and leadership who inspired his countrymen for a quarter of a century as king, and for many more before that," UK Prime Minister Tony Blair said in a statement.
"He was also a good friend of the United Kingdom. Our two countries have benefited very greatly over the years from his wise advice."
France's President Jacques Chirac expressed "profound sadness" at the news in a message of condolence to the Saudi government.
"During his reign, King Fahd put the safety of his people above all else. In perilous times he was the guarantor of his country's cohesion and the defender of regional stability. He knew how to apply wisdom to the Kingdom's changes," the message said.
King Fahd ascended the throne in 1982 after seven years as crown prince, making him absolute monarch of the world's largest oil-producing country and home of Islam's two holiest sites, the mosques at Mecca and Medina.
He threw the weight of the kingdom behind Arab causes and was heavily involved in regional issues such as the search for a peaceful settlement to the Lebanese civil war which ended with an agreement signed in the kingdom.
The monarch's decision in 1990 to invite American forces into Saudi Arabia after Iraq's invasion of Kuwait was heavily criticised within the country.
Many say it contributed to the rise of al-Qaeda whose leader, Osama Bin Laden, was born in Saudi Arabia.