North Korea urged people to rally behind Kim's youngest son Jong-Un, describing him as "great successor" to the leader who presided over the deaths of hundreds of thousands from hunger but still built an nuclear weapons arsenal.
South Korea put its military on emergency alert but urged its people to stay calm, and swiftly closed ranks with its close ally the United States. Analysts said there would likely be little turbulence in the North -- at least for now.
The leader "passed away from a great mental and physical strain" at 8:30 am on Saturday (2330 GMT Friday), while travelling by train on one of his field trips, the official Korean Central News Agency (KCNA) said.
It urged people to support Jong-Un, who is in his late 20s and was last year made a four-star general and given top ruling party posts despite having had no public profile.
"All party members, military men and the public should faithfully follow the leadership of comrade Kim Jong-Un and protect and further strengthen the unified front of the party, military and the public," a weeping female announcer, clad in black, said on television.
KCNA said Kim died of a "severe myocardial infarction along with a heart attack". He suffered a stroke in August 2008 which triggered an acceleration in the succession plans.
Video footage from China Central Television showed people sobbing on the streets of Pyongyang. "How can I express all the sorrow... I can't say any more," a soldier said.
Kim's funeral will be held on December 28 in Pyongyang but no foreign delegations will be invited, KCNA said. National mourning was declared from December 17 to 29.
"We must hold high the flag of songun (military-first) policy, strengthen military power a hundred times and firmly defend our socialist system and achievement of revolution," it said.
At the North Korean embassy in Beijing, the capital of its main ally China, the national flag was flying at half mast. China offered its "deep condolences".
North Korea's propaganda machine has rolled into action to build up the same personality cult for Jong-Un that surrounded his father and late grandfather Kim Il-Sung, the founder and "eternal leader" of North Korea who died in 1994.
"The North's top guys have already sorted out everything and the regime seems to be stable under the new leadership," said Paik Hak-Soon of Seoul's Sejong Institute.
"I don't expect any major turbulence or power struggle within the regime in the foreseeable future.
"The Kim Jong-Un era has already started."
Analysts stressed that North Korea was entering an uncertain period, although its senior figures were likely to stick closely together for now.
"The North Korean elite has a vested interest in maintaining the system and will assess Jong-Un's ability to protect its interests," said Bruce Klingner, a Northeast Asia expert at Washington's Heritage Foundation.
South Korea summoned a meeting of the National Security Council and President Lee Myung-Bak called an emergency cabinet meeting.
The Joint Chiefs of Staff said it had increased monitoring along the border along with US forces in the country but no unusual activity had been observed.
North and South Korea have remained technically at war since their three-year conflict ended only in an armistice in 1953. The United States stations 28,500 troops in the South.
Lee had a phone conversation with US President Barack Obama about two hours after Kim's death was announced at noon (0300 GMT), officials said.
"The president reaffirmed the United States' strong commitment to the stability of the Korean peninsula and the security of our close ally, the Republic of Korea," the White House said in a statement.
Japan, which has no diplomatic relations with North Korea, offered its condolences over the death but also called an emergency security meeting.
The news shocked South Koreans and some expressed fears of renewed conflict.
"I'm worried there will be a war. I thought it wasn't true at first," said student Song Bo-Na, 22.
KCNA, quoting a statement from the national funeral committee headed by Jong-Un, said Kim Jong-Il's body would lie in state in Kumsusan palace where his father's embalmed body is on display.
It said mourners would be allowed to visit from December 20 to 27.
Following the funeral, another event to mourn the leader would be held on December 29. Mourning shots are to be fired and three minutes of silence would be observed. All trains and ships will sound their horns.
Kim took over after his father and founding president Kim Il-Sung died in 1994, coming to power with a reputation as a playboy with a taste for the finer things in life.
But in the mid- to late-1990s he presided over a famine which killed hundreds of thousands of his people. Severe food shortages continue and the UN children's fund estimates one-third of children are stunted by malnutrition.
Kim still found the resources to continue a nuclear weapons programme which culminated in tests in October 2006 and May 2009. The country is believed to have a plutonium stockpile big enough for six to eight weapons.
For several months there have been diplomatic efforts to restart six-nation nuclear disarmament talks which the North abandoned in April 2009.
- AFP/cc/ir
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