His manager Mark Morrissey said the actor was surrounded by family and friends at a hospice in the Melbourne suburb of Kew when he died just after 8pm on Saturday night.
Hunter was admitted to the hospice earlier this week after refusing to go into hospital. The acting legend had inoperable cancer.
In a storied career which spanned 50 years, Hunter worked with most of Australia's notable directors and actors.
Mr Morrissey described Hunter as a fine actor, a true storyteller and a great friend, saying he will be sorely missed.
"During the course of his long and esteemed career, Bill touched the lives of many people," Mr Morrissey said.
He said Hunter recently summed up his approach to his craft in an interview for the feature film The Cup, in which he played Australian racing legend Bart Cummings.
Hunter said: "As long as the director told me where to stand and what to say, I was happy.
"Anyone who says there's any more to it than that, is full of bullshit. It's a job. It is a craft, but there's no art involved.
"What you need is common sense and a reasonably rough head.
"You put on the make-up and the wardrobe and that is half the performance.
"That upsets the purists but never mind, they don't work as much as I do."
Mr Morrissey said Hunter was "much loved, a gentleman, an inspiration to fellow actors, a journeyman, and a rogue".
Storied career
Hunter's list of work reads like a history of Australian film and television, with appearances in more than 100 big and small screen productions.
He worked alongside Mel Gibson in Peter Weir's Gallipoli (1981), played the meddling ballroom federation president Barry Fife in Baz Luhrmann's Strictly Ballroom (1992) and starred as then-newcomer Toni Collette's father in Muriel's Wedding (1994).
At the same time as filming Muriel's Wedding, he worked on PJ Hogan's The Adventures of Priscilla, Queen Of The Desert (1994), starring alongside Terence Stamp, Guy Pearce and Hugo Weaving.
More recently, Hunter worked on Red Dog, TV miniseries The Pacific, Finding Nemo, Crackerjack and Luhrmann's Australia.
In 1978 he won an AFI award for Best Actor in a Leading Role for his part as Len Maguire in the movie Newsfront, which won eight AFIs that year, including Best Film.
Hunter, born in Ballarat, Victoria, started his career in television in the 1960s and worked on many Australian shows including Homicide, Prisoner, Matlock Police, SeaChange and Police Rescue.
'Giant of a man'
Australian entertainers took to Twitter to pay their respects.
Comedian and television host Adam Hills tweeted: "Saddened to hear of Bill Hunter's passing. Honoured to have worked with him. A giant of a man in every sense."
Dancing with the Stars host Daniel MacPherson tweeted: "Legend of the screen. Legend of a man."
Entertainer Marty Fields described his close friend as "an iconic Australian actor", telling Fairfax Radio his death was a "huge loss to the entertainment industry".
Mr Morrissey said a memorial service would be held at the Princess Theatre in Melbourne on Thursday at 2pm.
"If you are not able to attend, we invite you, whether you are in your favourite pub, a theatre, at home, in country towns, on the land or with friends anywhere throughout Australia, that at 6pm on Thursday the 26th you raise your glass as a salute and a final farewell to a great man," he said.
ABC
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