Noriega, 83, passed away in the Panama City public Santo Tomas hospital where he had been recovering from early March surgery to remove a brain tumor, and a subsequent operation to clean up cerebral bleeding.
The announcement of his death was made by government communications secretary Manuel Dominguez.
"Mr. Noriega died tonight (late Monday)," Dominguez told AFP.
Noriega had been serving prison time for murder and forced disappearances during his dictatorship, and was being held in a prison cell overlooking the Panama Canal.
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Following years of ill-health that included respiratory problems, prostate cancer and depression, Noriega's family pleaded with authorities to him to serve the rest of his sentence under house arrest.
But the government rejected their appeals, and said Noriega would return to prison once he recovered from the brain tumor surgery.
Noriega was toppled in a December 1989 US military invasion.
After surrendering to US troops in January 1990, he was flown to the United States where he was convicted on drug trafficking and money laundering charges, and sentenced to prison.
The following year Noriega was extradited to Panama, where he was locked up for the 1985 murder of a political opponent, the 1989 murder of a military officer who attempted a coup against him, and for the massacre of soldiers rebelling against him.
Other cases were pending against him for the disappearance of people before he became dictator, back when he headed Panama's National Guard.
In 2015, Noriega had apologized "to anybody who felt offended, affected, prejudiced or humiliated by my actions.