He was 88.
The king died at 3.52 pm (local time) at the Siriraj hospital, the palace said in a statement.
Crown Prince Maha Vajralongkorn, Princess Maha Chakri Sirindhorn, Princess Soamsawali and Princess Chulabhorn were at the hospital.
The 64-year-old Crown Prince will succeed the king, Prime Minister Prayuth Chan-ocha said.
On Sunday, the palace had said that the king was in an unstable condition after receiving haemodialysis treatment.
The widely revered monarch is central to Thai society and was often treated as a virtual god.
The King was also known as Rama IX, as he was the ninth monarch of the Chakri Dynasty.
Having acceded to the throne 70 years ago, he has been a source of stability and unity for a much changed and still deeply divided nation.
King Bhumibol is the world's longest serving monarch, having acceded to the throne when his brother died in 1946.
Amid increasing concerns about his health in recent months, the Royal Household Bureau had issued more frequent bulletins.
Earlier, Prime Minister Prayuth cancelled an official trip to India to attend the BRICS Summit 2016, a Government House source said.
The prime minister was scheduled to attend the BIMSTEC Outreach at BRICS Summit 2016 on Sunday.
The source said Prayut assigned Deputy Prime Minister Somkid Jatusriithak to attend the summit on his behalf.
A palace statement said late yesterday that the king's "blood pressure lowered and breath quickened".
The crowd of well-wishers praying for His Majesty the King continued to swell outside Siriraj Hospital as his loving subjects also gathered at government offices nationwide for prayers today.
People holding photographs of their loved King could be seen sobbing and some wailing even before an announcement was made this evening.
With most people unable to travel to Bangkok, interior permanent secretary Grisada Boonrach had ordered the proper arrangement of places at provincial halls, district offices and local administrative organisation offices nationwide for people to sign books.
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