Saramago, 87, died at his home in Lanzarote, one of Spain's Canary Islands, of multi-organ failure after a long illness, the Jose Saramago Foundation said.
"The writer died in the company of his family, saying goodbye in a serene and placid way," the foundation said.
Saramago was an outspoken man who antagonized many, and moved to the Canary Islands after a public spat with the Portuguese government in 1992.
His 1998 Nobel accolade was nonetheless widely cheered in his homeland after decades of the award eluding writers of a language used by some 170 million people around the world.
"People used to say about me, 'He's good but he's a Communist.' Now they say, 'He's a Communist but he's good,'" he said in a 1998 interview with The Associated Press.
Portuguese Prime Minister Jose Socrates said Saramago was "one of our great cultural figures and his disappearance has left our culture poorer."
Born Nov. 16, 1922 in the town of Azinhaga near Lisbon, Saramago was raised in the capital. From a poor family, he never finished university but continued to study part-time while supporting himself as a metalworker.
His first novel published in 1947 - "Terra do Pecado," or "Country of Sin" - was a tale of peasants in moral crisis. It sold badly, but won Saramago enough recognition to allow him jump from the welder's shop to a job on a literary magazine.
But for the next 18 years Saramago published only a few travel and poetry books while he worked as a journalist.
"I suppose I came to the conclusion I had nothing worth telling," he said of that period.
He returned to fiction only after the four-decade dictatorship created by Antonio Salazar was toppled by a military uprising in 1974.
International critical acclaim came late in his life, starting with his 1982 historical fantasy "Memorial do Convento," published in English in 1988 as "Baltasar and Blimunda."
The story is set during the Inquisition and explores the battle between individuals and organized religion, picking up Saramago's recurring theme of the loner struggling against authority.
(Left: Two English translations of novels by Nobel Prize-winner Jose Saramago, "Blindness" and "Death With Interruptions.")
Sousa Lara withdrew the writer's name from Portugal's nominees for the European Literature Prize. Lara said Saramago's 1991 novel "O Evangelho Segundo Jesus Cristo" ("The Gospel according to Jesus Christ") - in which Christ lives with Mary Magdalene and tries to back out of his crucifixion - offended Portuguese religious convictions and divided the heavily Roman Catholic country.
Saramago was outraged and accused the government of censorship.
Saramago often found himself going against the tide of popular opinion. Portugal's membership of the European Union is overwhelmingly appreciated in his homeland, a country of 10.6 million people which despite EU development aid is still western Europe's poorest country.
Saramago, however, disagreed.
"First of all I'm Portuguese, then Iberian, and then, if I feel like it, I'm European," he once told the AP.
From the 1980s Saramago was one of Portugal's best-selling contemporary writers and his works have been translated into more than 20 languages.
But he never courted the kind of fame offered by literary prizes and his bluntness could sometimes offend.
"I am skeptical, reserved, I don't gush, I don't go around smiling, hugging people and trying to make friends," he once said.
In 1998 he said his book "Blindness" was about "a blindness of rationality." In that book, which was made into a 2008 movie starring Mark Ruffalo and Julianne Moore, the population of an unnamed city is struck by a mysterious blindness which is never explained. Society's fragilities come to the fore as a general breakdown of infrastructures ensues.
"We're rational beings but we don't behave rationally. If we did, there'd be no starvation in the world," he said.
Such compassion and anxiety about the skewing of priorities in modern society is evident in all his works and also gives a clue to his enduring sympathy toward the Communist Party.
He was frequently compared with Colombian writer Gabriel Garcia Marquez and his writing is often described as realism tinged with Latin-American mysticism, particularly for his technique of confronting historical personages with fictional characters.
Portuguese critic Torcato Sepulveda said Saramago successfully "sought to reconcile the rationalism of his materialistic world view with the richness of his baroque style."
Others disagreed, saying Saramago was too intellectual and that his storytelling pace often slowed to a dreary plod, or that his sparing use of punctuation and speech marks confused the reader.
Saramago had a remedy: "I tell them to read my books out loud and then they'll pick up the rhythm, because this is 'written orality.' It is the written version of the way people tell stories to each other," he said.
Historical and literary mischief were Saramago's trademarks.
In "The History of the Siege of Lisbon," from 1989, a Lisbon proofreader mischievously inserts the word "not" into a text on the 12th century capture of the Portuguese capital from the Moors, thereby fictionally altering the course of European history with a stroke of his pen.
In his 1986 book, "The Stone Raft," the Iberian peninsula snaps off from the rest of the European continent and floats off into the North Atlantic - apparently in a metaphorical search for identity away from the standardizing nature of the EU.
He left a wife, Spanish journalist Pilar del Rio, and a daughter from his first marriage.
Major Works by Jose Saramago:
"A Viagem do Elefante " (The Trip of the Elephant), 2008
"As Intermitências da Morte" (Death with Interruptions), 2005
"Ensaio sobre a Lucidez" (Seeing) 2004
"O Homem Duplicado" (The Double), 2003
"A Caverna" (The Cave), 2001
"O Conto da Ilha Desconhecida" (The Tale of the Unknown Island), 1997
"Todos os Nomes" (All the Names), 1997
"Ensaio sobre a Cegueira" (Essay on Blindness), 1995.
"O Evangelho Segundo Jesus Cristo" (The Gospel According to Jesus Christ), 1991.
"Historia do Cerco de Lisboa" (The History of the Siege of Lisbon), 1989.
"O Jangada de Pedra" (The Stone Raft), 1986.
"O Ano da Morte de Ricardo Reis" (The Year of the Death of Ricardo Reis), 1984.
"Memorial do Convento" (published in English in 1988 as "Baltasar and Blimunda") 1982.
"Levantado do Chao" (Raised From the Floor), 1980.
"Manual de Pintura e Caligrafia"(Manual of Painting and Caligraphy), 1977.
"O Ano de 1993" (The Year 1993), 1975.
"Provavelment Alegria" (Probably Happiness), 1970.
"Os Poemas Possiveis" (The Possible Poems), 1966.
"Don Giovanni ou o Dissoluto Absolvido," 2005
"A Segunda Vida de Francsco de Assis" (The Second Life of Francis of Asissi), 1987.
"Que Farei com Este Livro?" (What Will I Do With This Book?), 1980.
"A Noite" (The Night), 1979.
"As Pequenas Memórias" (Memories of My Youth), 2006
Nobel Prize in Literature, 1998
Portuguese Writer of the Year, 1992.
Portuguese PEN Club Award, 1982, 1991.
Independent Foreign Fiction Award, for "O Ano da Morte de Ricardo Reis" (The Year of the Death of Ricardo Reis), 1984.