She was best known for her depictions of human relationships and their crises, mainly in the small towns of Ireland but also in London.
"We have lost a national treasure," said Irish Prime Minister Enda Kenny.
The Irish Times, her former employer, told the AP it had spoken to Binchy's family and said the acclaimed author had died in a Dublin hospital on Monday with her husband Gordon Snell by her side.
"She was an outstanding novelist, short story writer and columnist, who engaged millions of people all around the world with her fluent and accessible style," said Ireland's president, Michael D. Higgins.
"In recent years she showed great courage and thankfully never lost her self-deprecating humor, honesty and remarkable integrity as an artist and human being," Higgins said.
Binchy, author of "Circle of Friends" and "Tara Road," wrote 16 novels, four collections of short stories, a play and a novella. Her work landed her on The New York Times' bestseller list and in Oprah's Book Club.
In recent years she continued to write despite being slowed down by arthritis and a heart ailment.
"I do realize that I am a popular writer who people buy to take on vacation. I'm an escapist kind of writer," Binchy said in an interview with the BookReporter website.
"I was just lucky I lived in this time of mass-market paperbacks," she added.
Describing her childhood in Dalkey in County Dublin, Binchy wrote on her official website that she was "full of enthusiasms, mad fantasies, desperate urges to be famous and anxious to be a saint. "
After graduating from University College Dublin, Binchy worked as a teacher before becoming a journalist, columnist and editor at the Irish Times, one of the country's leading newspapers.
She later moved to England, where she became the newspaper's London editor in the early 1970s.
Her first novel, "Light a Penny Candle," was published in 1982 - after being rejected by five publishers - and became a bestseller.
That book led to an invitation to appear on a French TV program, "a terrifying serious program about books," she recalled two years ago in an interview with Donald O'Donoghue of broadcaster RTE.
"Suddenly they asked me, as only the French would, 'Madame, what is your philosophy of life?' What a cosmic question, but I had to answer, and answer quickly, because it was live.
"So I said, in French, 'I think that you've got to play the hand that you're dealt and stop wishing for another hand.'"
Several of her works - including "Circle of Friends" and "Tara Road" - were turned into films. "Tara Road," about Irish and American women who switch homes without having met, was chosen by U.S. TV talk show host Oprah Winfrey for her popular book club, bringing her many new readers.
She had announced in her column in 2000 that "Scarlet Feather" would be her last novel, prompting more than 800 people to write in protest to The Irish Times.
A new novel, "Quentins," appeared in 2002.
In the same year, she suffered a health crisis related to a heart condition, and doctors warned that it would restrict her activity. Her time in hospital waiting rooms, absorbing the conversations of patients, inspired another novel, "Heart and Soul," in 2009.
Binchy's novel "Minding Frankie" was published in 2010, the same year she received a lifetime achievement honor from the Irish Book Awards. Her latest novel, "A Week in Winter," is to be published later this year.
In an interview two years ago, Binchy said she preferred to deal with issues which could be argued from either side.
"I often wonder that if I had met Hitler, I reckon I might have found some streak of decency in him," she told O'Donoghue.
"I once tried to write a novel about revenge. It's the only book I didn't finish. I couldn't get into the mind of the person who was plotting vengeance," she said.
The best advice, she added, comes from the "Coronation Street," a British soap opera: "Oh, get over yourself."
Binchy is survived by her husband, her brother William and her sister Joan. Funeral arrangements were not immediately announced.