Hepburn, who had been in declining health in recent years, died of old age, said Cynthia McFadden, a close friend and executor of her estate.
Her backyard acting blossomed into a career for the ages: Four Academy Awards, 12 nominations, 60 years of stage and screen brilliance, a lifetime of feisty independence.
But Katharine Hepburn always thought she could do more.
"I could have accomplished three times what I've accomplished," she once said. "I haven't realized my full potential. It's disgusting."
That perfectionism was balanced by grace and sheer joy in being alive.
"Life's what's important," she once said. "Walking, houses, family. Birth and pain and joy - and then death. Acting's just waiting for the custard pie. That's all."
"Through her films generations to come will discover her humor, her grace, her keen intelligence," McFadden said in a statement from the family at a news conference near Hepburn's home. "She was and always will be an American original. She died as she lived, with dignity and grace."
Her mark of 12 Academy Award nominations stood as a record in the acting categories until Meryl Streep surpassed that total in 2003. Her Oscars were for "Morning Glory," 1933; "Guess Who's Coming to Dinner," 1967; "The Lion in Winter," 1968; and "On Golden Pond," 1981.
Hepburn brought a chiseled beauty and patrician bearing to such films as "The Philadelphia Story" and "The African Queen."
"I think every actress in the world looked up to her with a kind of reverence and a sense of 'oh boy, if only I could be like her,'" actress Elizabeth Taylor said in a statement.
Hepburn, the product of a wealthy, freethinking New England family, was forthright in her opinions and unconventional in her conduct. She dressed for comfort, usually in slacks and sweater, with her red hair caught up in a topknot.
She married only once, briefly, and her name was linked to Howard Hughes and other famous men, but the great love of her life was Spencer Tracy. They made nine films together and remained close companions until Tracy's death in 1967.
She was born in Hartford on May 12, 1907, one of six children of Dr. Thomas N. Hepburn, a noted urologist and pioneer in social hygiene, and Katharine Houghton Hepburn, who worked for birth control and getting the vote for women.
Her father built a theater in the family's back yard, where young Katharine's career took root.
"My parents were much more fascinating, as people, than I am," the actress once said. "Mother was really left of center; women's suffrage was her great cause, and I remember appearing at all the local fairs carrying huge flocks of balloons that said `Votes for Women.' I almost went up with them."
Young Kate was educated by tutors and at private schools, entering Bryn Mawr in 1924. After graduating, she joined a stock company in Baltimore.
She made her New York debut in "These Days" in 1928, the same year she married Philadelphia socialite Ludlow Ogden Smith. She divorced him in 1934 and later remarked, "I don't believe in marriage. It's bloody impractical to love, honor and obey. If it weren't, you wouldn't have to sign a contract."
But she also lauded "Luddy" for opening doors in New York for a raw young actress. She berated herself as behaving like "a pig" toward him.
"At the beginning I had money; I wasn't a poor little thing. I don't know what I would have done if I'd had to come to New York and get a job as a waiter or something like that."
Her Broadway role in "Warrior's Husband" brought a movie offer from RKO, and she went to Hollywood at $1,500 a week to star opposite John Barrymore in the 1932 film "A Bill of Divorcement." The lean, athletic actress with the well-bred manner became an instant star. The voice Tallulah Bankhead once likened to "nickels dropping in a slot machine" became one of Hollywood's most-imitated.
Hepburn's third movie, "Morning Glory," brought her first Oscar. A string of parts followed - Jo in "Little Women," the ill-fated queen in "Mary of Scotland," the rich would-be actress in "Stage Door," the madcap socialite of "Bringing Up Baby," the shy rich girl in "Holiday."
A theater chain owner branded her and other stars "box-office poison" after a series of flops, and her film career waned.
Undaunted, Hepburn acquired the rights to a comedy about a spoiled heiress, and, after it was rewritten for her, took it to the New York stage. "The Philadelphia Story" was a hit.
She returned to Hollywood for the 1940 film version, which featured James Stewart and Cary Grant. Once again she was a top star, with a contract at MGM for "Woman of the Year," "Keeper of the Flame," "Sea of Grass," "Dragon Seed," "Without Love," "State of the Union," "Pat and Mike" and "Adam's Rib."
Her first film with Tracy was "Woman of the Year," in 1942. Legend has it that when they met she commented, "I'm afraid I'm a little big for you, Mr. Tracy." His reply: "Don't worry, I'll cut you down to size."
One critic compared them to "the high-strung thoroughbred and the steady workhorse."
Tracy never divorced his wife, who outlived him by 15 years; Hepburn, though she led a PBS tribute to Tracy in 1986, rarely mentioned their private relationship.
"I have had 20 years of perfect companionship with a man among men," she said in 1963. "He is a rock and a protection. I've never regretted it." In another interview, she discussed their special screen magic, saying they represented "the perfect American couple."
"The ideal American man is certainly Spencer - sports loving, man's man, strong-looking, big sort of head, boar neck and so forth. And I think I represent a woman. I needle him, and I irritate him, and I try to get around him, and if he put a big paw out and put it on my head, he could squash me. And I think that is the romantic ideal picture of the male and female in this country."
After leaving MGM in 1951, Hepburn divided her time between the stage - she appeared in Shaw's "The Millionairess" and Shakespeare's "As You Like It" - and film. She coolly braved a jungle for "The African Queen" and did her own balloon flying in the low-budget "Olly Olly Oxen Free."
She co-starred with Taylor and Montgomery Clift in "Suddenly Last Summer," with Jason Robards Jr. in "Long Day's Journey into Night," with Laurence Olivier in the TV movie "Love Among the Ruins" and with Henry Fonda in "On Golden Pond," which won both of them Oscars.
She coaxed the ailing Tracy back onto the set for their roles as wealthy, liberal parents faced with the interracial marriage of their daughter in "Guess Who's Coming to Dinner." Tracy died before the film's release.
Though an early appearance in "The Lake" promoted Dorothy Parker's famously scathing remark that Hepburn "ran the gamut of emotions from A to B," she worked as tirelessly on stage as in movies.
She starred in the musical "Coco" in 1969. When she broke an ankle during "A Matter of Gravity" in 1976, she went on in a wheelchair. Fans flocked to see her on Broadway in "West Side Waltz," in 1982, and when the show moved on to Boston, Hepburn displayed her outspokenness by ordering out a spectator who disturbed her by taking pictures.
Hepburn nearly lost a foot in a car accident in late 1982 and spent almost three weeks in a hospital. But by the end of the year she was back before the cameras, co-starring with Nick Nolte in "Grace Quigley."
For many years, she divided her time between New York and Connecticut. Even well into her 70s, she was restless with energy, arising at dawn and going to bed at 7 p.m. when she wasn't appearing in a play or making another film.
"No matter where she was this was home," said longtime friend Barbara Maynard, a former town official in Old Saybrook. "She was one of us. She just wanted to be Kate Hepburn - a neighbor."
Unassuming throughout her career, Hepburn once scrawled her signature on a wall backstage at The Bushnell, a venerable Hartford stage, as simply "Katharine Hepburn, local girl."
Hepburn aided the small shoreline town in many ways, making several anonymous gifts to the community. She once donated a fire truck to the local department and helped the town buy property for a waterfront park.
Hepburn took to writing; her first book, "The Making of `The African Queen': Or, How I Went To Africa With Bogart, Bacall and Huston and Almost Lost My Mind" made her a best-selling author at 77. She followed it up with "Me: Stories of My Life" in 1991.
Among the honors coming her way in later years: In 1999, a survey of screen legends by the American Film Institute ranked her No. 1 among actresses.
She had various health problems in later years, including hip replacement surgery and tremors similar to Parkinson's disease.
In a 1990 interview, she told The Associated Press: "I'm what is known as gradually disintegrating. I don't fear the next world, or anything. I don't fear hell, and I don't look forward to heaven."
McFadden said that according to Hepburn's wishes, there will be no memorial service and burial will be private at a later date.
Hepburn is survived by a sister, Margaret Hepburn Perry; a brother, Dr. Robert Hepburn; and 13 nieces and nephews.
"Of course we knew this was coming," Maynard said. "Katharine was prepared for it and she wasn't afraid of it at all. I don't think Katharine was afraid of anything."