Book publishing firm Magveto Kiado said Kertesz died at his home in Budapest in the early hours of Thursday after a long illness.
The writer's fiction was drawn largely on his own experiences as a teenage prisoner of Nazi concentration camps.
The Nobel judges said in 2002 his works portrayed the "ultimate truth" about just how cruel human beings could be.
Kertesz was the first Hungarian to win the Nobel Prize for literature, although Hungarians had already won Nobel science awards.
After winning, he spent most of the following decade in Berlin where he produced his last works before returning to Budapest, later developing Parkinson's disease and rarely leaving home.
Born in Budapest in 1929, Kertesz was deported to Auschwitz in 1944 and later to the Buchenwald concentration camp in east Germany, which was liberated by the US Army in 1945.
On returning to Hungary he struggled to forge a career as a journalist under a Communist regime and lost his job in 1951 when his paper turned to following the restrictive Communist Party line on what could and could not be said.
His works, including his defining first novel Fateless, draw repeatedly on his experience at Auschwitz, the camp in German-occupied Poland where more than one million Jews and other victims of Hitler's Third Reich died.
He won literature's most prestigious prize for "writing that upholds the experience of the individual in the face of a barbaric and arbitrary history," the Swedish Nobel Academy said.
They added that, in his depiction of the suffering of Auschwitz prisoners, Kertesz showed he was "one of the few people who manages to describe that in a way which is immediately accessible to us, [those] who have not shared that experience".
'Greatest freedom of all'
Written between 1960 and 1973, Fateless told the story of a boy's survival in a concentration camp. It was rejected for publication at first by Communist censors and was finally released in 1975, but was largely ignored in Hungary despite the fact that around 500,000 Hungarian Jews were killed by the Nazis.
In an interview Kertesz once said: "As a child you have a certain trust in life. But when something like Auschwitz happens, everything falls apart."
But he also told Newsweek in 2002: "You cannot imagine what it's like to be allowed to lie in the camp's hospital, or to have a 10-minute break from indescribable labour.
"To be very close to death is also a kind of happiness. Just surviving becomes the greatest freedom of all."
As well as journalism, Kertesz became a translator, converting the works of Friedrich Nietzsche, Sigmund Freud, Ludwig Wittgenstein and Elias Canetti into his native Hungarian.
Numerous other novels continuing the themes of the Holocaust, dictatorship and personal freedom appeared throughout the 1980s and 1990s, winning Kertesz professional respect but not a wider audience. The Nobel win changed that, bringing him domestic and international fame.
His other famous novels include 1988's Fiasco and 1990's Kaddish For An Unborn Child - which formed a trilogy with Fateless - Someone Else from 1997 and 2003's Liquidation, which he described as his "last novel about the Holocaust".
He is survived by his second wife, Magda.