The kingdom moved swiftly to replace the fallen king with his half brother, Crown Prince Abdullah, who has effectively ruled the country since Fahd was incapacitated by a stroke in 1995.
King Fahd ibn Abdul Aziz al-Saud, the fifth absolute monarch of Saudi Arabia since its inception in 1932, guided the desert kingdom through turbulence in the oil market, regional wars and the increasing tension between Islamic tradition and rapid globalization and modernization.
He died at a hospital in the capital, Riyadh, where he was admitted for pneumonia and a high fever on May 27.
"With all sorrow and sadness, the royal court in the name of his highness Crown Prince Abdullah bin Abdul Aziz and all members of the family announces the death of the custodian of the two holy mosques, King Fahd bin Abdul Aziz," the country's information minister said in a statement read on state-run Saudi TV.
President Bush was informed of the death in the morning when he arrived at the Oval Office, according to spokesman Scott McClellan. The president reportedly called Abdullah to express condolences and congratulations on his accession.
The new monarch immediately appointed his half brother, Defense Minister Prince Sultan, 77, as his crown prince and successor. All three men had the same father, Saudi Arabia's founder Abdul-Aziz, who had over 40 sons.
Sultan's son, Prince Bandar, was Saudi Arabia's ambassador to the United States until he stepped down to return home two weeks ago.
Arab nations declared a mourning periods and Middle Eastern leaders prepared to attend the funeral Tuesday.
"Saudi Arabia has lost one of its dutiful sons, a leader among the most dear of its leaders and men," said Egyptian President Hosni Mubarak.
In 1986, King Fahd sparked tension between the House of Saud and Islamic conservatives when he named himself Custodian of the Two Holy Places, the Saudi cities of Mecca and Medina, which contain Islam's most sacred sites.
In 1994, he stripped Osama bin Laden of his Saudi citizenship because of his activities against the royal family.
He also allowed hundreds of thousands of American troops to be based in Saudi Arabia during the first war against Iraq despite heated criticism from other Arab countries.
At the same time, King Fahd supported the ultra-strict Wahhabi sect of Muslims that, led by the al-Sheikh family, established religious schools throughout the Islamic world that have been described as breeding grounds for terrorists.
Crude oil prices soared past $61 a barrel Monday as markets reacted to the death, but analysts predicted the rise was not permanent as the accession was not a surprise.