The 29-year-old has been fighting for her life in St George Hospital since being pulled from the wreckage, along with her 21-year-old sister Annabelle on December 26 near Ulladulla on the NSW south coast.
The hospital on Friday confirmed Jessica's life support had been switched off.
"She remains in a critical condition," the statement read.
"The family has asked for privacy during this very difficult time."
The news comes two days after Jessica's three family members were farewelled at a funeral at St Mary's Catholic Church in Concord.
The Falkholt's family car was hit by a four-wheel drive on Boxing Day, with the sisters being pulled from the wreckage before it erupted in flames with the bodies of their parents inside.
Mourners gathered at St Mary's Catholic Church in Concord to farewell Lars, Vivian and Annabelle Falkholt. Source: SBS News
Annabelle died as a result of her injuries three days after the smash.
Jessica has reportedly undergone several surgeries, including the removal of a kidney and part of her skull, and has been in a coma since the crash.
The 29-year-old found fame on the small screen as Hope Morrison in Home and Away, with the long-running TV soap paving the way for her feature film debut in the forthcoming supernatural thriller Harmony.
Following reports her life support had been turned off, Home and Away tweeted: "Rest in peace, beautiful Jessica Falkholt".
Meanwhile, a star of the show James Stewart tweeted: "RIP Falkholt family" late Thursday night.
The driver of the four-wheel-drive, 50-year-old Craig Whitall, was reportedly travelling home from a Nowra methadone clinic when he was also killed in the collision.
Whitall was a habitual traffic offender with more than 60 convictions to his name, according to The Daily Telegraph.
The state's Roads Minister Melinda Pavey said it couldn't have been a more terrible set of circumstances leading to the tragedy.
Lars, Vivian, Annabelle and Jessica Falkholt on Christmas Day. Source: Supplied
"Everything that the community expects us to do to keep them safe has not worked in this instance that's, to be brutally honest and frank, the situation we're all facing," she told 2GB Radio on Friday.
The Falkholt family was remembered as an inseparable, radiant group.
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