Rafsanjani, who was 82, was a pivotal figure in the foundation of the Islamic republic in 1979.
He had been admitted to the Shohadaa Hospital in northern Tehran, one of his relatives, Hossein Marashi, was quoted as saying by the agencies.
Rafsanjaniserved as president twice between 1989 and 1997.
He was badly beaten in the 2005 presidential election by hardliner Mahmoud Ahmadinejad in a conservative backlash.
But rather than retreating from public view because of that humiliation, he remained in the limelight, emerging as a moderate counter-figure to the ultra-hardliners clustered around Ahmadinejad, under whom Iran's relations with the West plummeted.
In recent years, his influence within state institutions had waned.
In 2013, his candidacy for the presidential election was rejected because of his advanced age.
The next year, he delivered crucial support for the eventual winner, Hassan Rouhani, a moderate with whom he has a warm rapport.