Mr Terreblanche wanted a separate white homeland
South African white supremacist leader Eugene Terreblanche has been killed on his farm in the country's north-west.
Mr Terreblanche, 69, was beaten to death by two farm workers after a dispute over unpaid wages, police say. Two people have been charged.
President Jacob Zuma has appealed for calm, saying the killing should not incite racial hatred.
Mr Terreblanche, who campaigned for a separate white homeland, came to prominence in the early 1980s.
TERREBLANCHE: KEY DATES
1941: Born on farm in Transvaal town of Ventersdorp
1973: Co-founds AWB to protect rights of Boers' descendants
1993: AWB vehicle smashes into World Trade Centre in Jo'burg during talks to end apartheid
1994: AWB invades tribal homeland of Bophuthatswana and is defeated; three AWB men die
1998: Accepts moral blame for 1994 bomb campaign that killed 21
2001: Jailed for attempted murder of security guard farm-worker
2004: Released from prison
He became the champion of a tiny minority determined to stop the process that was bringing apartheid to an end.
"Mr Terreblanche's body was found on the bed with facial and head injuries," said Natal Police Capt Adele Myburgh.
"There was a panga [broad-blade knife] on him and knobkerrie [wooden club] next to the bed."
Capt Myburgh said Mr Terreblanche had been killed at his home outside the town of Ventersdorp, North West province, after a payment dispute with two workers, aged 21 and 15, who have been arrested and charged with his murder.
Mr Zuma condemned the killing as a "terrible deed".
"The president appeals for calm... and asks South Africans not to allow agent provocateurs to take advantage of this situation by inciting or fuelling racial hatred," his office said in a statement reported by South Africa's SAPA news agency.
"The murder of Terreblanche must be condemned, irrespective of how his killers think they may have been justified. They had no right to take his life."
The murder comes amid growing anxiety about crime in South Africa and what opposition politicians say are irresponsible and racially inflammatory sentiments from a minority of the ruling ANC party, says the BBC's Karen Allen in Johannesburg.
The incident comes 10 weeks before South Africa hosts the first World Cup football tournament on African soil.
A spokesman for Mr Terreblanche's Afrikaner Weerstandsbeweging (Afrikaner Resistance Movement - AWB) linked the killing to the recent singing of an apartheid-era song by a firebrand ANC leader.
"That's what this is all about," Andre Visagie told Reuters news agency. "They used pangas and pipes to murder him as he slept."
Last week, South Africa's High Court banned firebrand ANC Youth League leader Julius Malema from singing "kill the Boer". The court said the song was hate speech, but the ANC is appealing.
Martin Plaut, Africa editor
For most South Africans, Eugene Terreblanche was a throwback to another era. But his death is a blow to the country's image of racial tolerance, fostered so carefully by Nelson Mandela.
Some are likely to believe that the fact that his alleged attackers were arrested so rapidly smacks of a cover-up. Others, on the minority far-right fringe, will see his death as a vindication of their assertion that whites cannot live under black rule.
It is a tragic fact that more than 3,000 white farmers have been murdered since the end of apartheid in 1994. And it is possible that some people may seek retribution.
Mr Terreblanche's funeral could become a rallying point for such sentiment.
Boer is Afrikaans for a farmer, but also a derogatory term for any white in South Africa.
Campaigners had blamed Mr Malema's singing of the song for the recent murders of several white farmers in Gauteng province.
Farming organisations in the Ventersdorp area are calling for calm as they are worried that rising tensions may escalate out of control.
A spokeswoman for the opposition Democratic Alliance party linked Mr Terreblanche's death to racial tensions.
Juanita Terblanche, no relation, said: "This happened in a province where racial tension in the rural farming community is increasingly being fuelled by irresponsible racist utterances."
The minority party Freedom Front Plus called on people to refrain from reacting emotionally.
"The murder of Eugene Terreblanche creates an explosive situation and is condemned in the strongest possible terms," the party's spokesman, Pieter Groenewald, was quoted as saying by the SAPA news agency.
More than 3,000 white farmers are estimated to have been murdered since the end of apartheid in 1994.
A committee of inquiry found in 2003 a political or racial motive in only 2% of farm attacks, although critics said this figure was far too low.
Mr Terreblanche was released from prison in 2004 after serving three years of a five-year term for attempted murder.
He had founded the white supremacist AWB in 1973, to oppose what he regarded as the liberal policies of the then-South African leader, John Vorster.
Terreblanche rides away after being released from prison in 2004
His party tried terrorist tactics and threatened civil war in the run-up to South Africa's first democratic elections.
In the 1980s, the government of PW Botha considered a constitutional plan allowing South Africa's Asian and coloured (mixed-race) minorities to vote for racially segregated parliamentary chambers.
For the likes of Mr Terreblanche, this was the start of the slippery slope towards democracy, communism, black rule and the destruction of the Afrikaner nation, analysts say.
Claiming on occasion to be a cultural organisation - albeit one with sidearms and paramilitary uniforms - Mr Terreblanche and his men promised to fight for the survival of the white tribe of Africa.
An ill-fated military intervention into the Bophuthatswana homeland in 1994 ended with three AWB men being killed in front of TV cameras in a PR disaster that diminished further the seriousness with which Mr Terreblanche's movement was taken.
Mr Terreblance continued to campaign to preserve the apartheid system but lived in relative obscurity since it collapsed.
The AWB was revived two years ago and there had been recent efforts to form a united front among white far-right groups.