Johnston died early Wednesday morning at his home outside Houston, Texas, according to Tom Gimbel, Johnston's manager of over 25 years, reports cnn.com.
"He's just an inspiration. I think he was a true genius," said Gimbel.
Johnston's family and Gimbel said he died of natural causes.
"Daniel was a singer, songwriter, an artist, and a friend to all. Although he struggled with mental health issues for much of his adult life, Daniel triumphed over his illness through his prolific output of art and songs," a statement from Johnston's family read.
"He inspired countless fans, artists, and songwriters with his message that no matter how dark the day that 'the sun shines down on me' and 'true love will find you in the end.'"
Johnston got his start in Austin, Texas in the mid-eighties, attracting a small following who became fans of his homemade cassette tape recordings.
As he had the opportunity to release his music wider, Johnston developed a devoted cult following that included major names in music, from Kurt Cobain to Tom Waits to Jeff Beck.
Johnston struggled with mental health issues throughout his life, and an organisation "inspiring new conversations around mental health issues" called "The Hi, How Are You Project" was founded by Gimbel and Courtney Blanton with the support of Daniel Johnston and his family. The project is named after one of Johnston's albums.
Johnston also had physical health issues, according to Gimbel, related to diabetes and the medications he'd taken all his life.
The 2005 documentary film "The Devil and Daniel Johnston" helped bring the artist's work to a larger audience while also discussing his bipolar disorder and its manifestation through demonic self-obsession. Directed by Jeff Feuerzeig, it won the award for documentary directing at that year's Sundance Film Festival.
( With inputs from IANS )