The Toffees confirmed the sad news this morning after Lee died peacefully in his sleep.
He was in charge of the club between 1977 and 1981, leading them to a League Cup final, two FA Cup semi-finals and two top-four finishes in the Premier League.
Lee previously took charge of Port Vale, Blackburn and Newcastle, then had spells with Preston, KR Reykjavik and a janitor role at Leicester in 1991.
The former fullback spent almost his entire playing career with Aston Villa.
Between 1955 and 1966 he made 142 appearances for Villa, scoring twice and winning the 1961 League Cup.
He finished with a season at Shrewsbury but only played twice before becoming a coach.
Lee’s first managerial job at Port Vale lasted eight years and 258 games.
Graeme Sharp, who Gordon brought to Everton from Dumbarton in 1980, said, “I will always be grateful to Gordon Lee for bringing me to Everton Football Club.
“He trusted me and gave me my start as a young footballer. Gordon was instrumental in my development and I always enjoyed meeting him later in life.
“I am deeply saddened by his loss and extend my condolences to his family.”
Kevin Ratcliffe made his debut for the Toffees at Manchester United in March 1980.
He added: “Gordon loved giving young players an opportunity and I will always be grateful that he gave me mine at Everton.
“He was ahead of his time with some of his coaching methods and with a bit more luck he would have brought honours to the Club.
“He left his mark on Everton and his passing is very sad.”