Police said she died in her room at the Beverly Hilton Hotel, where she had been staying as a guest.
Houston was one of the most celebrated female singers of all time, with hits including I Will Always Love You and Saving All My Love For You.
But her later career was overshadowed by substance abuse and her turbulent marriage to singer Bobby Brown.
Ms Houston died on the eve of the Grammy Awards in Los Angeles. She had been due to attend a pre-awards party in the Beverly Hilton Hotel organised by her long-time mentor and record industry executive Clive Davis on Saturday evening.
He went ahead with the party, holding a minute's silence and telling the audience he was "personally devastated by the loss of someone who has meant so much to me for so many years".
Jazz legend Herbie Hancock, who was attending the event, said: "It's difficult not to be sad about it because it's a great loss. Her soul, her spirit, lives within all of us."
The hotel was already teeming with reporters and celebrities when police received an emergency call from hotel security at 15.43 local time (23:43 GMT), Beverly Hills police spokesman Mark Rosen told the BBC.
Police were despatched, but paramedics who were already at the hotel because of the party attempted to resuscitate her, without success. She was pronounced dead at 15:55.
Mr Rosen said Ms Houston's entourage - comprising family members, friends and co-workers - had taken over much of the fourth floor of the hotel.
"There were a number of people on scene who were able to positively identify Ms Houston for us," he said, adding that her next of kin have been informed of her death.
Police investigators inspected the scene before Ms Houston's body was moved from the hotel to the coroner's office for an autopsy.
While the cause of death is unclear, Mr Rosen said there were "no obvious signs of criminal intent".
An autopsy is likely to be held within the next two days. However, if drugs or alcohol are involved, it will take between six and eight weeks for toxicology tests to be completed.
The US celebrity website TMZ.com reported that Ms Houston had been partying heavily on both Thursday and Friday nights.
She briefly took the microphone and performed a song while out in Hollywood on Thursday, and was seen drinking and chatting loudly with friends in the hotel bar on Friday, according to TMZ.
