"We mourn our leader Guido Westerwelle," said his foundation on its Facebook page. "He died on March 18, 2016 at the Cologne University Clinic of complications from leukaemia treatment."
The former head of the liberal, pro-business Free Democratic Party (FDP) was diagnosed with the disease in June 2014, half a year after he left his post as Germany's top diplomat.
His foundation published a photo of Westerwelle with his husband, businessman Michael Mronz, and the message: "We fought. We had the goal within our sights. We are grateful for an incredibly wonderful time together. The love remains."
Westerwelle, a trained lawyer and gifted parliamentary debater, had been a fixture in German politics for decades, initially in opposition.
Under his leadership, the FDP won just under 15 percent of the vote, it best-ever result, in 2009 elections.
The FDP became the junior partner to Merkel's conservatives, and Westerwelle served as vice chancellor and foreign minister, a post he held until 2013.
Westerwelle had officially "come out" as gay at Merkel's 50th birthday party in 2004 with his partner, Mronz.
At the start of his term as Germany's top diplomat, Westerwelle dismissed concerns raised in the media on whether his homosexuality could pose problems on official visits abroad.
"Some other countries may have had a problem with the fact that Angela Merkel became the first female chancellor of Germany," he replied. "Of course she does not wear a veil on the red carpet when she visits certain Arab states."