The 71-year-old actor's body was found in an overturned car near Loch Ness and his wife Marilyn, 53, who was driving the vehicle, was airlifted to hospital with slight injuries.
Northern Constabulary said the accident happened in an area known as Knockies Straight on the B862 which runs along the south side of Loch Ness from Inverness to Fort Augustus.
The spokesman said: "The emergency services attended and found one vehicle on its roof.
![[ image: width=150]](/olmedia/500000/images/_503922_ianbannentwo150.jpg)
"The female driver was removed from the vehicle and flown by air ambulance to Raigmore Hospital. The male passenger sustained fatal injuries."
The accident happened during a holiday in Scotland, Mr Bannen's agent Jean Diamond said.
The actor won huge acclaim in the espionage drama Tinker, Tailor, Soldier, Spy, and for his role as Dr Cameron in the popular TV series Dr Finlay.
He enjoyed recent international success as the star of the comedy film Waking Ned - the story of an Irishman's plan to claim a big lottery win for his village.
Lifetime achievement
However, Mr Bannen, who was born in Airdrie, Lanarkshire, was renowned for a variety of roles on both stage and screen and received a lifetime achievement award from Bafta in 1996.
He was the only son of a leading lawyer, went to public school and served as a corporal in the Army.
His career began at the Dublin Gate Theatre and he soon graduated to playing leads, notably appearing opposite Vanessa Redgrave in a production of As You Like It.
West End appearances followed in A View From The Bridge, The Iceman Cometh and Long Day's Journey Into Night, in which he starred.
Notable movie roles included appearances in Station Six Sahara, The Offence, Defence of the Realm and Braveheart.
He was once a drinking companion of Peter O'Toole and Richard Burton but gave up alcohol after a spell of hepatitis.
Mr Bannen married Marilyn Salisbury, a former Ministry of Agriculture assistant, when he was 48. They lived in Ventnor, in the Isle of Wight, had no children.
Latest role
The actor was taking a short break from his latest role in a film provisionally entitled Strictly Sinatra.
The cast and crew of the film, written and directed by Peter Capaldi, paid tribute to him in a statement.
It read: "We are devastated to hear of the death of Ian Bannen earlier today. Ian was a hugely talented actor, a consummate professional and a much loved colleague.
Donald Emslie, managing director of television with Scottish Media Group, which made the Doctor Finlay series, was also among those who paid tribute.
"We are deeply saddened by this news and send our condolences to his family and friends," he said.
Scottish actor Brian Cox told BBC Newsnight Scotland: "I could not imagine anyone else like him. He really was one of the first international actors.
"He was an inspiring actor. He inspired everyone who worked with him."
Toys withdrawn in E.coli health scare
Collins calls it a day for Scots
(From Sport)
Pro-lifers plan shock launch
Death inquiry anaesthetist barred
Bowled over by Lord's
Ministers loosen purse strings
'Delight' at Tunnel court outcome
Derby double swoop fails
(From Sport)
Demands for far-reaching information bill
Gaelic makes sound use of the internet
Trusts 'ignoring' depression advice
BBC Scotland - On Air
'Little change' since poverty pledge
Nine hurt as bus crashes into pub
Teachers' union in pay body challenge
Dental death hearing adjourned
Parliament ponders Royal High flit
Reid quits PR job
Industry misses new trains target
Football and royalty dominate Westminster
The next Battle of Britain
(From Sport)
Man charged with murdering lab technician
Lockerbie trial judges named
Festival award for Ratcatcher