The singer's family confirmed his death in a statement to Rolling Stones on Wednesday, stating he passed from 'natural causes.'
He was hospitalized with a kidney malfunction last week, but he had returned to his home outside Houston, Texas on Tuesday.
'The Johnston family is deeply saddened to announce the death of their brother, Daniel Johnston,' the family's statement began.
'He passed away from natural causes this morning at his home outside of Houston, Texas. Daniel was a singer, songwriter, an artist, and a friend to all,' they added.
'Although he struggled with mental health issues for much of his adult life, Daniel triumphed over his illness through his prolific output of art and songs,' the family continued.
'He inspired countless fans, artists, and songwriters with his message that no matter how dark the day, "the sun shines down on me" and "true love will find you in the end,"' the statement concluded.
Johnston was born in Virginia and raised in Sacramento, California, but he first came into prominence after moving to Austin, Texas, where he would frequently hand out tapes of his music to people he met.
He found success with live performances and was featured on the MTV program The Cutting Edge in 1985 as part of Austin's 'New Sincerity' music scene.
Johnston recorded his first studio album dubbed 1990 in 1988, and in 1989 he released It's Spooky, but his mental health started deteriorating.
In 1990, he was flying in a plane piloted by his father Bill, when he had a psychotic episode, where he reportedly believed he was Casper the Friendly Ghost and threw the plane's keys out of the plane.
His father, a former Air Force pilot, miraculously managed to crash land the plane with Bill and David emerging relatively unscathed, though it lead to him being committed to a mental institution.
Johnston's profile was raised significantly when Nirvana frontman Kurt Cobain wore a t-shirt featuring Johnston's album Hi, How Are You, and he would state in interviews that he was among the 'greatest' songwriters.
While he was still in a mental institute, there was a bidding war by major labels to sign him, with Johnston ultimately signing with Atlantic in 1994, releasing one album, Fun, which flopped, and he was dropped from the label in 1996.
Johnston re-surfaced in 2004 with the double-album The Late Great Daniel Johnston: Discovered Covered, with the first album featuring covers of his songs by artists like Tom Waits, Beck, Death Cab for Cutie and more, and the second disc featuring the original recordings.
He was also the subject of the documentary The Devil and Daniel Johnston, which debuted at the 2005 Sundance Film Festival and was released in March 2006.
Johnston had been diagnosed with schizophrenia and bipolar disorder, with his brother Dick revealing his physical health has suffered after taking a recent fall.
'Keeping him healthy has been the struggle and when he’s not well, you deal with a different person,' Dick said.
'He was lucid and in good spirits. As good as I’ve seen him in years. The [ankle] swelling was down and the problem looked good. He was happy to be home,' he added.
On Tuesday night, a caretaker went to check on him at approximately 8:30 PM but Johnston declined to see them.
His body was discovered on Wednesday morning, according to his brother.
As word of his death spread, many fans took to Twitter to mourn the loss of Johnston, including filmmaker Judd Apatow.
'So sad to hear of the death of the great Daniel Johnston,' Apatow began. 'Here is a beautiful performance of his which makes me cry every time.'
Apatow's tweet included a video of Johnston performing with Glen Hansard and Marketa Irglova.
Singer-songwriter Zola Jesus added, 'There are not enough words I can say about the important and vitality of Daniel Johnston's musical spirit. He was a huge inspiration to me, to follow my creative impulses no matter how messy or simple. RIP.'
Actor/musician Jason Ritter added, 'Daniel Johnston wrote beautiful songs and inspired countless musicians and songwriters. The heart and its truths are captured in his music. I feel lucky to have been introduced to his music and his artistry. I never know what to say in these times, but I will miss you.'
© Associated Newspapers Ltd.