Sabah, 91, had ruled the Gulf Arab oil producer and US ally since 2006 and steered its foreign policy for more than 50 years. His designated successor is his brother, Crown Prince Sheikh Nawaf al-Ahmad al-Sabah.
"With the utmost sadness and grief for the Kuwaiti people, the Islamic and Arab world and people of friendly nations, the Emiri Diwan mourns the death of Sheikh Sabah al-Ahmad al-Jaber al-Sabah, the emir of Kuwait," his office said.
The emir had been in hospital in the United States since July following surgery for an unspecified condition in Kuwait that same month.
Sheikh Sabah sought to balance relations with Kuwait's bigger neighbours - forging the closest ties with Saudi Arabia, rebuilding links with former occupier Iraq and keeping open dialogue with Iran. He tried to mediate in a Gulf dispute that saw Riyadh and its allies impose a boycott on Qatar.
A succession is not expected to affect oil policy or foreign investment strategy through the Kuwait Investment Authority, one of the world's biggest sovereign wealth funds. Oil policy is set by the country's Supreme Petroleum Council, which is appointed by the emir.
The new emir's choice of crown prince and prime minister - who would be tasked with managing the government's often difficult relationship with parliament - will be watched closely, especially at a time when Kuwait's finances have been strained by low oil prices and the coronavirus pandemic.
‘Dean of Arab diplomacy’
Kuwait's emir, an unwavering champion of Arab detente amid wars and regional tumult, helped lead his country out of the ruin of Iraq's 1990 invasion to renewed riches and a Gulf mediator role, first as its top diplomat and later as ruler.
Keenly aware of Kuwait's small size and huge oil wealth, Sheikh Sabah al-Ahmad al-Sabah saw astute diplomacy as crucial to its recovery from Iraq's seven-month occupation, navigating frequent tensions between much larger neighbours Saudi Arabia, Iraq and Iran.
But he saw his dream of Gulf unity implode after a new generation of hawkish leaders in Saudi Arabia and the United Arab Emirates led the boycott of Qatar in mid-2017, shattering the 39-year-old Gulf Cooperation Council bloc he helped build and defend from external threats.
Dubbed the "dean of Arab diplomacy" after four decades as Kuwait's foreign minister, the emir tried up until his death to resolve the row over Qatar which he said left him "bitter".
Sabah let slip in remarks shortly after the embargo that he helped ward off a military attack on Qatar, prompting an angry denial by boycotting states in a rare personal rebuke of him.
"After Sheikh Sabah, we will be weaker," he said, noting that none of the other senior family figures have the same experience in navigating regional tensions, a view shared by other sources close to the ruling family and diplomats.
Strong ties with Washington, rebuilding relations with Baghdad
Sabah kept strong ties with the US, which led a coalition that ended Iraq's 1990-91 occupation and used Kuwait as a launchpad for the 2003 Iraq invasion. Despite some public unease about rapprochement, in 2012 he visited Iraq to start rebuilding ties with Baghdad.
He pushed back when close ally Riyadh sought greater control over shared oilfields during a September 2018 visit by Saudi Crown Prince Mohammed bin Salman, sources familiar with the talks have told Reuters. Kuwait and Saudi Arabia finally agreed last December on the shared oilfields, ending a five-year dispute.
He was critical of the Saudi-led military campaign in Yemen and took a strong stand for Palestinian rights as other Gulf states welcomed Israeli overtures, and, in the case of the UAE and Bahrain, sealed diplomatic accords.
A diplomat described Kuwait's ties with Saudi Arabia, which sheltered the al-Sabah family during the Iraqi occupation, as its closest but most complicated foreign relationship.
Sabah also diverged from other Gulf leaders in refusing to back Syria's rebel fighters with arms as he believed that would only fuel the conflict there. Instead, he made fundraising for humanitarian aid in Syria one of Kuwait's priorities.
A small figure with a beaming smile and husky voice, his negotiating skills at home were repeatedly put to the test as escalating tensions between his hand-picked government and the elected parliament held up investment and economic reforms.
Analysts say parliament's backing for his leadership in 2006 gave him a strong political base. He was active in policymaking and regularly used his executive powers to dissolve parliament, which plays a key role in the succession and has in the past pushed an ailing emir out of office.
Sabah's successor and half-brother, Crown Prince Sheikh Nawaf al-Ahmad al-Sabah, is expected to assume power. Nawaf, who is 83, would appoint a new crown prince after a meeting of senior family members aimed at reaching consensus. Parliament would also need to approve the new crown prince.
‘Immune and inviolable’ according to the constitution
Sheikh Sabah broke the hold of opposition groups, both Islamists and liberals, on parliament by using executive powers to amend the voting system in 2012. Kuwaitis angered by the move staged some the of the largest marches in the country's history.
Although Kuwait managed to escape Arab Spring unrest in 2011, protesters stormed parliament that same year, when MPs were prevented from questioning the Prime Minister over corruption allegations. The premier, a nephew of the emir, later resigned.
Dozens of Kuwaiti opposition figures were arrested for openly criticising the emir. The constitution says the emir, who has the last say in state matters, is "immune and inviolable".
(FRANCE 24 with REUTERS)