A spokesperson at the New York-Presbyterian/Weill Cornell Medical Center, where Horne was being treated, said she died on Sunday, without giving a cause of death.
US President Barack Obama eulogized the singer on Monday as "one of our nation's most cherished entertainers".
"Over the years, she warmed the hearts of countless Americans with her beautiful voice and dramatic performances on screen," said Obama, who also praised Horne as a champion of equal treatment for blacks, especially other blacks actors, singers and musicians.
"In 1940, she became the first African American performer to tour with an all white band," the president said in his statement.
"And while entertaining soldiers during World War II, she refused to perform for segregated audiences -- a principled struggle she continued well after the troops returned home," Obama said.
Edited out of films in US South
Horne rose to fame in the mid 1940s, with musicals that included "Thousands Cheer" (1943), "Broadway Rhythm" (1944), "Two Girls and a Sailor" (1944), "Ziegfeld Follies" (1946), and "Words and Music" (1948).
A sultry beauty with a silky voice, her performance in several Hollywood movies however was filmed in ways so that editors could cut her out when the movie was shown in the racially segregated southern United States.
In the 1960s, Horne put her career on hold to commit herself to the civil rights struggle and participated in marches against racial discrimination.
At the peak of her career Horne performed in the top US night clubs and cabarets, singing and appearing in shows with other prominent performers such as Judy Garland, Bing Crosby and Frank Sinatra.
Horne announced her retirement in 1980, but the following year backtracked and returned to star in an award-winning Broadway musical based on her life, titled "Lena Horne: The Lady and Her Music," which played to capacity for 14 months.
Born Lena Mary Calhoun Horne on June 30, 1917 in Brooklyn, New York, Horne's parents divorced when she was three years old.
While her mother traveled in search of work Horne was often in the care of her grandmother, an activist in women's rights and civil rights groups.
Cotton Club chorus girl
Horne began her performance career at the age of 16, dancing as a chorus girl at Harlem's famed Cotton Club, where black performers entertained a strictly white audience.
She went on to sing in night clubs, which eventually led to a spot with the all-black Noble Sissle's Society Orchestra.
In 1940 she became the first black person to tour with an all white group, the Charlie Barnet band, in which she was the featured singer.
Metro Goldwyn Mayer studios signed her to a seven-year contract in 1941, something unprecedented among black performers of the time, and soon became one of the best known black performers in the United States.
Her first film for MGM was "Panama Hattie" (1942), where she sings the Cole Porter song "Just One of Those Things".
During World War II Horne entertained US troops, but refused to sing for racially segregated groups -- and in one incident, refused to sing for a group of German prisoners of war sitting in front of black US soldiers, according to a Kennedy Center biography.
Civil rights activist
In the post-war era Horne was active in the civil rights movement, and as a prominent member of the NAACP black civil rights group often spoke at their rallies.
Vogue magazine once described Horne as "Hollywood's first black beauty, sex symbol, singing star".
Horne however was clear about the unfortunate secret of her success.
"I was unique in that I was a kind of black that white people could accept," Horne once said, according to the Los Angeles Times.
"I was their daydream. I had the worst kind of acceptance because it was never for how great I was or what I contributed. It was because of the way I looked."
Since her full-time retirement in 2007, Horne lived in an apartment in New York's Upper East Side, where her close friends said she had a passion for chocolate.
Horne is survived by a daughter, Gail Lumet Buckley, according to The New York Times. Her husband died in 1971 and her son died of kidney failure the same year.
