Hayden, the 2006 MotoGP world champion, had been hospitalized at the Maurizio Bufalini Hospital in Cesena, Italy, following the accident last week.
"It is with great sadness that Red Bull Honda World Superbike Team has to announce that Nicky Hayden has succumbed to injuries suffered during an incident while riding his bicycle last Wednesday," Red Bull Honda posted on its website
The statement also said that fiancée Jackie, mother Rose and brother Tommy, who flew in from the US, were at his side.
"On behalf of the whole Hayden family and Nicky's fiancée Jackie I would like to thank everyone for their messages of support -- it has been a great comfort to us all knowing that Nicky has touched so many people's lives in such a positive way," Tommy Hayden said.
"Although this is obviously a sad time, we would like everyone to remember Nicky at his happiest -- riding a motorcycle. He dreamed as a kid of being a pro rider and not only achieved that but also managed to reach the pinnacle of his chosen sport in becoming World Champion. We are all so proud of that.
"Apart from these 'public' memories, we will also have many great and happy memories of Nicky at home in Kentucky, in the heart of the family. We will all miss him terribly."
The American, who had been racing for Red Bull Honda's World Superbike team, collided with a car near Rimini on May 17 while training. He had been in the intensive care unit at the hospital in Cesena.
A statement released Friday by the hospital confirmed he had sustained multiple injuries, including "serious cerebral damage."
"Throughout his career Nicky's professionalism and fighting spirit was greatly valued and carried him to numerous successes, including his childhood dream of being crowned MotoGP World Champion with Honda in 2006," Red Bull Honda said. "As well as being a true champion on the track, Nicky was a fan favourite off it due to his kind nature, relaxed demeanour, and the huge smile he invariably carried everywhere.
"Nothing says more about Nicky's character than the overwhelming response expressed by fellow racers and his legions of fans over the past few days. Jackie and his family are truly grateful for the countless prayers and well wishes for Nicky."
Hayden, from Owensboro, Kentucky, was treated at the scene and taken to a hospital near Rimini before being transferred to the facility in Cesena.
"Hayden will be deeply missed by the paddocks he has graced throughout an incredible career, his millions of fans around the world, and by all those closest to him," MotoGP said on its website
. "We wish to pass on our sincerest condolences to his family, friends, team and colleagues as we sadly bid farewell to the 'Kentucky Kid' far too soon -- a true legend of the sport, and to all those who knew him."