Concerns about Iwata's health first emerged last year when he skipped the high-profile E3 games conference due to medical reasons, but he returned to work after undergoing surgery and presided over Nintendo's AGM in late June.
The company said this morning that Iwata died on Saturday due to a growth in his bile duct.
Chris Morris, a long-time video game industry writer, paid tribute to Iwata as "a developer who made it to the company's top office - and never lost his love for games."
"Satoru Iwata was an icon in the gaming world," Morris said. "He was a kind, generous and completely charming person who left this planet much too early. The industry will forever be in his debt."
Iwata joined the world's largest gaming company Nintendo in 2000. He was involved in some of Nintendo's iconic games like Super Mario and the The Legend of Zelda. Under his watch, Nintendo launched the Wii gaming console, which helped to popularize gaming beyond the traditional, male fanbase to a wider demographic.
Nintendo has suffered in recent years as consumers switched to playing games casually on their mobile phones. But in a major change in strategy, Nintendo announced in March that it would start making smartphone games.
Analysts cheered the move at the time, saying a combination of the company's powerful gaming franchise, which includes Donky Kong, and the size of the mobile gaming market could propel earnings.
Last fiscal year, Nintendo posted its first operating profit in four year at 24.77 billion yen.