Jamalul Kiram III, 75 - who described himself as the "Sultan of Sulu" after a group of islands in the southern Philippines - passed away at a government hospital but remained defiant to the end, his wife, Fatima Kiram said.
"The sultan died a poor but honourable man," she told AFP, adding that his fight to reclaim Sabah as part of the sultanate's territory would continue.
"His last words to all his brothers and followers were, 'It has already begun. Let us continue it for the good of our people. Do not abandon our people,'" she quoted him as saying.
She said, however, this did not mean renewed violence, adding that the family was willing to enter into negotiations with Malaysia.
Her husband had been undergoing twice-weekly dialysis sessions for kidney disease before his death.
In February, at least 100 armed followers of Kiram, who claimed to be the hereditary chief of the "Sultanate of Sulu and North Borneo," entered Sabah to press his claim on the Malaysian state.
After the group refused to lay down their arms Malaysian security forces moved against them, resulting in deadly clashes that left dozens dead and sent the invaders fleeing.
The Sultan of Sulu once ruled over islands that are now parts of the southern Philippines, as well as Sabah.
However the sultanate lost control of Sabah to European colonial powers in the 18th Century. The former British colony became part of the federation of Malaysia when it was formed in 1963.
Kiram and his family, as heirs to the sultanate, still receive annual compensation from Malaysia - the equivalent of about $1,700 - but he had previously said this amount was far too low.
Aside from Kiram, there are other descendants of the sultanate who also claim to be the true sultans of Sulu.
Fatima Kiram said her husband's younger brother, Bantillan, would take over as sultan, stressing he had "the legal authority".
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