Muoi, a party member for nearly 80 years, passed away in a military hospital in Hanoi following a long illness, the government and state media said.
"Comrade Do Muoi... made many great contributions to the revolutionary cause of the party and the nation," the official state-run Vietnam News Agency said Tuesday.
Born in Hanoi in 1917, Muoi joined Ho Chi Minh's communist revolution at age 19, eager to expel Vietnam's French colonial rulers who were eventually overthrown in 1954.
His revolutionary activities landed him in Hanoi's infamous Hoa Lo prison in 1941 -- later dubbed the 'Hanoi Hilton' by American POWs, including John McCain, imprisoned there during the Vietnam War.
Muoi escaped four years later by slipping out of his prison uniform and fleeing via a sewer drain.
Muoi spent much of his political career climbing party ranks, eventually joining the politburo in 1982 and gaining a reputation as a conservative ideologue.
After the Vietnam War ended in 1975, he led a campaign dubbed "X2" to dismantle tens of thousands of private enterprises in the south -- then the economic engine of the newly-unified country.
He made no secret of his anti-capitalist views and became known for an infamous motto.
"Capitalists are like sewer rats, whenever one sees them popping up one must smash them to death!" he said, according to Nhan Tri Vo's book "Vietnam's Economic Policy Since 1975".
He later admitted the X2 crusade was "a little too dogmatic", though he never took personal responsibility for the brutal campaign.
But he retained his hardline reputation throughout the 1990s, decrying peasant protests against taxation as attempts to "sabotage" the state, and pushing for a compulsory labour scheme to rebuild the country's tattered infrastructure.
Muoi eventually fell in step with the party's embrace of "Doi Moi" economic reforms starting in the 1980s, which saw Vietnam slowly open its doors to privatisation and foreign investment.
And as party leader -- he held the powerful title from 1991 to 1997 -- he oversaw the government's push to normalise relations with Washington in 1995.
But repairing ties with the former wartime foe came with conditions.
In 1997 he told then-US Secretary of State Madeleine Albright that Washington should help Vietnam recover from "consequences left by the war, including rehabilitation for handicapped people and consequences caused by the Agent Orange", according to the party's official newspaper.
Muoi's death comes after Vietnam's president Tran Dai Quang died in Hanoi on September 21 at age 61.
He is expected to be given a state funeral, though details have not yet been released.