He died of respiratory complications shortly after 5 p.m. at Walter Reed National Military Medical Center, with his wife and son at his side.
Inouye was hospitalized last week and had undergone procedures to regulate his oxygen intake.
He won his ninth consecutive term in 2010 and was the second longest-serving senator in the chamber's history, trailing only Sen. Robert Byrd of West Virginia. Inouye was a senator for all but three of the Hawaii's 53 years as a state and had served as its first House member before that.
He enlisted in the U.S. Army shortly after the attack on Pearl Harbor. In World War II, Inouye lost an arm charging machine gun nests in San Terenzo, Italy, earning him the Medal of Honor.
He served as chairman of the Senate Committee on Appropriations and the Senate Commerce Committee, and was the first chairman of the Senate Select Committee on Intelligence.
Inouye graduated from the University of Hawaii and the George Washington University School of Law.
Asked recently how he would want to be remembered, the senator said: "I represented the people of Hawaii and this nation honestly and to the best of my ability. I think I did OK," according to his office.
His last word was "Aloha," it said.
Senator Jim Webb (D-Va.) issued the following statement on Senator Daniel Inouye (D-HI), who passed away today at the age of 88:
“I deeply regret the passing of Senator Inouye, for whom I had enormous respect as a famed soldier, a principled public servant, and a United States Senator who broke new historical ground with his service. He was a leader whose dignity and judgment caused him to be listened to by politicians of both parties and of all political philosophies. He will be remembered as one of the great Senators of the post-World War Two era. I am grateful for having had the opportunity to serve alongside him.”
Senator-elect Timothy M. Kaine released the following statement on the passing of Hawaii's longtime U.S. Senator, Daniel K. Inouye.
"Senator Inouye’s life was defined by service to his country and I am saddened to hear of his passing. As a soldier in the U.S. Army during World War II, he confronted prejudice and earned our nation’s highest military honor, the Medal of Honor, for his heroism and sacrifice on the battlefield. After returning home he dedicated his life to serving the people of Hawaii, representing them in the Senate for fifty years and championing the welfare of our military men and women and their families. He leaves behind an incredible legacy of service and a powerful example of what our politics should be about. Anne and I offer our condolences to Senator Inouye’s family, colleagues, and many friends."