The president-for-life passed away at the age of 66 after a cardiac arrest at 1.10 a.m. local time (8.10 p.m. GMT Wednesday), following several years of heart trouble, which had been kept secret from the desert nation's population.
A state TV channel in the ex-Soviet republic broadcast a government statement on Niyazov's death praising the dictator's achievements while showing his portrait in a black frame, the Russian Embassy said over the phone.
The leader, who styled himself Turkmenbashi, or head of all Turkmen, underwent heart bypass surgery in Germany nine years ago. Since then, German cardiologist Hans Meissner, who conducted the operation, was reportedly Niyazov's personal doctor and stayed close by him to monitor his condition.
Some Russian media reported in October that Niyazov had begun feeling unwell on October 2 after congratulating the National Security Ministry on its 15th anniversary. Over the past year, Turkmen media reported twice of "regular medical examinations" of the president, but played down the leader's condition.
The Turkmen government, the State Security Council and parliamentarians said in a televised statement, "The people of Turkmenistan... will remain committed to the political course of Saparmurat Turkmenbashi."
Soon after the news came in, opposition leaders, who have been living abroad to avoid prosecution following mass purges in the country, said they might fly back to the country in the coming days, and meet to discuss how to react to the situation.
Khudaiberdy Orazov, a former deputy prime minister and chairman of the Vatan movement, said he had already spoken with other opposition leaders over the phone. Nurmukhammed Khanamov, leader of the Republican Party, called on opposition forces to unite in a bid "to prevent anarchy and confrontation in the country."
Moscow, which has resisted radical changes of power in post-Soviet nations, said it hoped the domestic and foreign policy course in Turkmenistan would continue, and bilateral cooperation would further develop. Russia buys and re-exports large volumes of cheap natural gas from the energy-rich country.
Kremlin Aide Sergei Prikhodko said, "We expect the Turkmen leadership to base their work on the interests of the Turkmen people, and will work towards strengthening bilateral ties."
An opposition source said Niyazov's relatives are currently outside the country, but will return home soon.
"I know that his wife, Muza Alexeyevna, is still in London with her daughter, and they have probably gone to the embassy or airport to fly back for his funeral. They might be back in the country later today," he said.
Niyazov ruled the impoverished ex-Soviet Central Asian republic with an iron fist and created a huge personality cult. He ordered golden statues of himself to be set up in the main streets and squares of the capital, Ashgabat, and in the middle of the desert, and used the country's natural gas wealth to fund his lavish lifestyle.
Experts estimate that up to 40% of people in the predominantly Muslim country have no permanent jobs, and that most salaries are below $25. However, the government has maintained stable pension payouts.
The dictator penned a book on his philosophical teachings entitled Rukhnama, worshipping the role of motherhood and associating it with the motherland. The eccentric leader's mother died in an earthquake in 1948.
All Turkmen bookstores were obliged to sell the book, which was also displayed in government offices. Rukhnama was a key part of the school curriculum, and its teachings were even included in driving tests.
In 1993 he renamed the Caspian port of Krasnovodsk Turkmenbashi after himself, and in 2002, decreed that the months and days of the week be renamed after him and his family.
Niyazov's funeral will take place on the morning of Sunday, December 24, in the presidential palace. He will then be taken to a mausoleum, which has already been built in his home village, Kipchak.
On December 26, the country's supreme representative body, the People's Council, will meet for an emergency session to choose a successor for the deceased president.
Bakyt Baketayev, an expert in Central Asian studies and the head of the international affairs department in neighboring Kyrgyzstan's parliament, has said the region could be in for a turbulent period in the wake of Niyazov's death.
"The region may turn into a boiling pot," he said, adding that supporters of the late president would come under strong pressure from the opposition, which has the backing of the international community.
"It is obvious that international rights organizations such as the OSCE will support it [the opposition] in order to lead the country to adopting democratic standards," he said.
Turkmenistan is an associated member in the Russia-led Commonwealth of Independent States (CIS), a loose union that succeeded the Soviet Union, and is a party to another post-Soviet alliance, the Collective Security Treaty Organization.
Following a decision by the Turkmen Security Council, December 28 will be a day of mourning.