Rossi died in the early hours of Thursday morning (AEDT), RAI-TV announced.
The cause of his death is unknown. He was 64.
The man stole the hearts of millions of Italians by scoring six goals in the latter stages of the 1982 FIFA World Cup in Spain, which Italy won.
His predatory instincts also broke the hearts of millions of Brazilians after he grabbed a poacher’s hat-trick to help Italy win 3-2 and knock out one of the greatest Brazil sides of all time in a classic in Barcelona.
Rossi added two more goals in the semi-final against Poland which the Italians won 2-0 and he opened the scoring in the Azzurri’s 3-1 win over West Germany in the final in Madrid.
His six goals that made him the leading scorer of the competition were a microcosm of the perfect striker.
From the way he lost Junior to head home his opener against Brazil, his alertness to turn almost full circle to stab home the winning goal in the same match, his ability to be in the right space at the right time to head in the clincher against Poland and his perfect timing to connect with an inswinging cross from Claudio Gentile in the final.
Italian football had a new hero to cherish although purists would suggest that 'Pablito' was a fitter and more complete footballer four years earlier when he helped Italy to fourth place in the World Cup in Argentina.
Rossi, who was a Juventus player in 1982, became a worldwide celebrity and he was the star attraction when the 'Bianconeri' toured Australia two years later.
Socceroos centre-half David Ratcliffe, who faced Rossi three times, said he was "very sad" to hear of the news.
"I was actually marking him in the three matches and I still have his shirt," Ratcliffe said.
"He obviously was a very good player to deal with. He had scored in the World Cup final only two years earlier. It's very sad news. So soon after Diego Maradona's death, too. This has not been a good year for football."
Yet Rossi's defining moment of his career nearly did not happen.
The striker was suspended for three years for his part in the betting scandal that rocked Calcio in 1980 while he was on the books of Perugia.
He missed the European Championships on home soil that same year and would have been ineligible for the World Cup in Spain too had his suspension not been reduced by one year.
He has always maintained his innocence.
He went into the Spanish football fiesta with just three Serie A matches under his belt and cut a forlorn figure in the first phase of the tournament in which Italy scraped into the next round with three unconvincing draws against Poland, Peru and Cameroon.
Rossi was largely ineffectual and the Italian media was calling for him to be dropped.
But manager Enzo Bearzot stuck with him in the next round-robin against Argentina and Brazil because he knew that, like most strikers, all he needed was one goal and his confidence would return.
Rossi showed signs of a revival during Italy’s 2-1 win over the Argentines before he stole the limelight in the fixture with Brazil.
Bearzot’s brave decision was vindicated because Rossi became the key ingredient of a richly talented side that was captained by goalkeeper Dino Zoff that just needed someone to stick the ball in the net.
Paolo Rossi was their man.
