The Prison Service confirmed the man who became known as the Muswell Hill Murderer had passed away at HMP Full Sutton on Saturday, 34 years into his life sentence.
It is believed he died from natural causes.
During the late 1970s and early 1980s, Nilsen carried out a murderous spree of near-unparalleled savagery.
He is believed to have killed as many as 15 young men, most of them homeless homosexuals, at his north London home.
After luring his victims to their death, Nilsen would often sit with their corpses for days before dismembering them.
His warped crimes were only detected by chance - when a drain outside his home on Cranley Gardens, Muswell Hill, became blocked by the human remains he had tried to flush away.
He was jailed for life with a recommendation he serve a minimum of 25 years in 1983, on six counts of murder and two of attempted murder.
A spokesman for the Prison Service said: "Dennis Andrew Nilsen, date of birth November 23 1945, died in custody at HMP Full Sutton on Saturday, May 12 2018.
"As with all deaths in custody, there will be an independent investigation by the Prisons and Probation Ombudsman."
Homosexual predator Nilsen would often befriend his victims in the pubs and bars of London, before offering to entertain them at his flat.
Once there, many were strangled to death - sometimes after they had lost consciousness - leaving him free to defile their remains.
A grim interview aired in 1993 saw the bespectacled Scottish murderer describe the macabre scenes that followed.
He told an interviewer how he enjoyed caring for the bodies, dressing them and undressing them and recounted in horrific detail how they were then cut up.
While some remains were inexpertly flushed away by Nilsen, others were stored under his floorboards and in cupboards for many months, meaning detectives were greeted with the foetid stench of decay when they first searched his flat.
He said: "The bodies are all gone. There is nothing left. But I still feel a spiritual communion with these people."
His house of horrors in Muswell Hill has been on the market several times since and is still occupied today, with flowers visible in the attic window.
The sentence given to him in 1983 was later upgraded to a whole-life tariff.