Paul had reached the octopus old age of 2½ years and died in his tank on Tuesday morning at the Sea Life aquarium in the western German city of Oberhausen, spokeswoman Ariane Vieregge said.
Paul correctly tipped the outcome of all seven of Germany's games. He made his predictions by opening the lid of one of two clear plastic boxes, each containing a mussel and bearing a team flag.
The octopus seemed to be in good shape when he was checked late Monday, but he did not make it through the night. He died of natural causes, Vieregge said.
"We had all naturally grown very fond of him and he will be sorely missed," Sea Life manager Stefan Porwoll said in a statement.
The aquarium has not yet decided how best to commemorate their most famous resident, he said.
"We may decide to give Paul his own small burial plot within our grounds, and erect a modest permanent shrine," Porwoll said.
After rising to global prominence during the World Cup in South Africa in June and July, Paul retired from the predictions business after the final between Spain and the Netherlands - correctly picking Spain - and returned to his primary role of intriguing children who attend the aquarium.
The invertebrate was stepping "back from the official oracle business," Tanja Munzig, a spokeswoman for the Sea Life, told AP Television News at the time.
"He won't give any more oracle predictions - either in football, nor in politics, lifestyle or economy," she said. "Paul will get back to his former job, namely making children laugh."
After his World Cup soothsaying skills were revealed, the English-born Paul was appointed as an ambassador to England's bid to host the 2018 World Cup. He had English roots, having been hatched at Weymouth Sea Life Center on England's south coast in 2008.
Imitators sprang up all over the world, including Mani the Parakeet in Singapore and Lorenzo the Parrot in Hannover, Germany.
The latest was a saltwater crocodile named Dirty Harry, who predicted Spain's World Cup final win and called the result of Australia's general election by snatching a chicken carcass dangling beneath a caricature of Prime Minister Julia Gillard.
"El Pulpo Paul" became so popular in Spain that the northwestern Spanish town of O Carballino tried to borrow him and made him an "honorary friend."
Paul, who had an agent, got hundreds of requests to go to Spain. The Madrid Zoo asked Sea Life if it would be willing to make a deal to bring him in as a tribute to the Spanish football team's victory, either temporarily or for good. But the German aquarium turned down that offer, too.
Paul's name will live on the Greek island of Zakynthos, where a permanent sea turtle rescue center funded in part by donations generated by the famous octopus is being established.
Associated Press writer David Rising in Berlin contributed to this report.