He is best known for the free trade deal he struck with the U.S. in 1988 but his legacy was later tarnished by revelations of improper business dealings with an arms dealer.
His daughter Caroline said on social media that he died peacefully surrounded by family.
Canadian Prime Minister Justin Trudeau said he was devastated by the loss.
"He was committed to this country, he loved it with all his heart and it served it for many many years in many different ways."
Mulroney sought to emulate in Canada the conservative leanings of Ronald Reagan and Margaret Thatcher by revamping the tax system and selling off government assets, including Air Canada.
The Canada-United States Free Trade Agreement was a high point of his nine-year tenure.
Mulroney also led two failed bids to change Canada's constitution to grant the predominantly French-speaking province of Quebec the status of a distinct society.
The efforts were intended to thwart the Quebec independence movement, and deepened divisions between French and English Canada, with long-lasting political repercussions.
After he left politics, a letter leaked in 1995 revealed Canadian authorities had accused Mulroney of taking kickbacks from an arms dealer on the sale of airliners to Air Canada in the late 80s.
Mulroney initially sued the Liberal government successfully, but a later inquiry in 2010 into the affair concluded the business dealings were inappropriate.
Mulroney denied the payments had been illegal, but apologized for taking the money.
He is survived by his wife Mila and four children.
