"His holiness has passed away," government spokesman Shimeles Kemal told AFP, but could not provide details of his death.
The Ministry of Foreign Affairs website reported Thursday that the patriarch had been receiving treatment for an undisclosed illness in recent weeks.
"In his absence, based on the bylaws and canons of the Coptic Church, a new leader will come into office," Shimeles added.
Abune Paulos was the patriarch of Ethiopia's Orthodox Church since 1992, when he was elected to the highest order of the denomination.
Some two-thirds of Ethiopia's 83 million people are Christian, the majority following the Orthodox faith.
The office of the patriarch is expected to hold an emergency meeting Friday to finalise funeral arrangements.
It is not clear whether Ethiopia's Prime Minister Meles Zenawi -- who has been on sick leave in recent weeks and has not been seen in public since June -- will attend the funeral.
"I have no information," Shimeles said, when asked if Meles is expected to attend the mourning.
Born in Tigray in northern Ethiopia, the patriarch was sporadically seen in public in his characteristic white robes, striking silver cross and tall white hat.
The son of a priest, he also served as a monk and a bishop before becoming patriarch.
He also served as a president of the World Council of Churches, an umbrella organisation made up of 349 churches and denominations from around the world and representing 560 million Christians.
He studied at Princeton's Theological Seminary in the US after receiving a degree in theology from Addis Ababa University.
Abune Paulos was arrested in 1974 under Ethiopia's fearsome Derg regime. When released he fled to the US, where he spent several years in exile before returning to Ethiopia in 1991 when Meles came to power.
He was seen as instrumental in brokering peace in the Ethiopia-Eritrea border war that ended in 2000, and was awarded a Nansen Medal by the United Nations refugee agency in 2000 for his peace and humanitarian work.
Ethiopia is home to some of Africa's oldest Orthodox churches, including a cluster of 11 ancient rock-hewn churches in Lalibella which are designated a World Heritage Site by UNESCO.