Haider, who led the far-right into a coalition government from 2000-2006, made headlines across the world and drew international condemnation with his blunt anti-immigrant statements and for seeming to flirt with Nazi sympathies.
The 58-year-old governor of Austria's Carinthia province died after suffering major head and chest injuries when the government car he was driving went out of control and rolled down an embankment, police said. He was alone in the car.
Police said they were investigating the cause of the crash.
"This is for us like the end of the world," said Haider's spokesman Stefan Petzner. He said Haider had been heading to a town near Klagenfurt in the mountainous southern province for a gathering of his family to mark his mother's 90th birthday.
Haider, a folksy character who struck a popular chord among many Austrians, headed one of two far-right parties that surged to a combined 30 percent of the vote in a parliamentary election last month, potentially redrawing Austria's political landscape.
Active in politics since his teenage years in the affluent Alpine country, he became a full-time politician in 1977 for the far-right Freedom Party.
Haider caused an international backlash when he led the Freedom Party into a coalition government with the conservative People's Party in 2000, triggering widespread condemnation and temporary European Union sanctions against Austria.
The deal fell apart, leading to an early election in 2002 in which the Freedom Party lost heavily, followed by a remake of the coalition.
After internecine struggles within the Freedom Party, Haider formed the breakaway Alliance for the Future of Austria in 2005. His new party became junior partner in the coalition government, while the Freedom Party left and went into opposition.
But in a national election in 2006, the Alliance for the Future of Austria only just scraped past the 4 percent threshold to enter parliament.
Haider also made headlines with several verbal gaffes and by making foreign trips to see leaders such as Iraq's Saddam Hussein and Libya's Muammar Gaddafi.
He once reproached Austria's government by citing the "proper labour policies" of Adolf Hitler's Nazi Germany. On another occasion he referred to Nazi concentration camps in a parliamentary debate as "penal camps".
Born in Upper Austria, his father was a former member of Hitler's brown-shirted storm troopers. His mother was a teacher who had been a Hitler Youth leader.
Haider is survived by his wife and two daughters.