King Juan Carlos gave Cela [L] a book prize in 1996
The 85-year-old died in Madrid from respiratory and coronary failure, the hospital Centro in the Spanish capital said.
With his first novel, published in 1946, Cela became a leader of a straightforward style of writing, called tremendismo, which clashed with the lyricism that had characterised writers of the previous generation in Spain.
His best known novels are The Family of Pascual Duarte and The Hive, both of which were adapted into successful films.
'Compassion'
Cela's work was riven with violent, grotesque images drawn from his country's civil war, which killed more than a million people.
When he was awarded his Nobel Prize, the Swedish Academy praised Cela's "rich and intensive prose, which with restrained compassion forms a challenging vision of man's vulnerability".
It said The Family of Pascual Duarte was the most popular work of fiction in Spanish since Miguel Cervantes's masterpiece, Don Quixote, was published, nearly 400 years previously.
A bon viveur who was known in Spain for his flamboyant lifestyle, Cela greeted the news of his Nobel victory with characteristic aplomb.
He commented: "Life is like a game of tennis, and this time I won."