The artist passed away on Thursday evening from ongoing health issues at Cedar Sinai Hospital in Los Angeles, her family said.
TMZ reports she died from congestive heart failure. Cole had blamed her past intravenous drug abuse after she contracted hepatitis C, which led her to undergo a kidney transplant in 2009.
"Natalie fought a fierce, courageous battle, dying how she lived ... with dignity, strength and honor," read a statement from her son, Robert Yancy, and sisters, Timolin and Casey Cole.
"Our beloved Mother and sister will be greatly missed and remain UNFORGETTABLE in our hearts forever."
Cole, who was married three times, followed her father into the music business with hits like This Will Be (An Everlasting Love).
The Grammy winner topped the charts in 1991 with Unforgettable, a virtual duet with her late father, who died in 1965 when she was 15.
In 2000, Cole released an autobiography, Angel on My Shoulder, which chronicled her abuse of heroin and crack cocaine.
Cole was born in 1950 to Nat King Cole and his wife, Maria Ellington Cole, a singer with the legendary Duke Ellington band.
With her parents' pedigree, not to mention musical mentors such as Frank Sinatra and Sammy Davis Jr, she seemed destined for the stage.
She began performing with her father when she was just 11 years old, before embarking on a career that embraced R&B, pop and jazz.
Cole faced racism while growing up in Los Angeles' overwhelmingly white, upmarket Hancock Park area.
When told residents didn't want "undesirable" neighbours, the young starlet said: "Neither do I, and if I see (any), I'll be the first to complain."
Her 1991 album, Unforgettable, which reworked some of her father's best-known hits, sold 14 million copies and won six Grammys.
Cole also took television acting roles, appearing on Grey's Anatomy and Touched by an Angel, a supernatural drama.
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