The 25-year-old, a member of Belgium's second-division team Wanty-Gobert, fell around 150 kilometres (90 miles) into the race in Sainte-Marie-Cappel, northern France.
He was then hit by a motorbike while on the ground, before being transported to a hospital in Lille where he succumbed to his injuries.
"The rider died. An inquiry is under way to determine the circumstances," said Frederic Evrard, spokesman for the Nord-Pas-de-Calais regional gendarmerie in France.
The cyclist's team earlier said Demoitie was in a "serious condition" in the hospital's intensive care unit.
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The Gent-Wevelgem cobbled classic lived up to its gruelling reputation on Sunday, with riders battling strong winds as they tackled 10 climbs over a 243 kilometre route.
Former Belgian national champion Jens Debusschere was also hospitalised after he sustained a concussion following a heavy crash, his Lotto-Soudal team said.
The race, which includes two ascents of the hills of Kemmelberg, was won by Slovakia's Peter Sagan.
A number of accidents have struck the sport this year, including the death of young hope Romain Guyot.
The 23-year-old Frenchman died in March when he was hit by a truck at a crossroads in the west of the country.