• William Wolfe addresses the Scottish National Party conference in Motherwell, May 1976.
Billy Wolfe was Nationalist leader for a decade, during which time his party achieved its greatest electoral success at Westminster.
The 86-year-old died in Udston Hospital in Hamilton following a period of illness.
Today Mr Salmond said that Mr Wolfe "more than anyone" had transformed the SNP into a modern political party.
He said his surprise second place in the 1962 West Lothian by-election
had been a key moment for the SNP.
Mr Wolfe was Nationalist leader from 1969 to 1979 and, under his leadership, the party won 11 seats in the general election in October 1974 – the highest number of MPs it has ever had.
Today Mr Salmond said he was "deeply saddened" by the former leader's death.
• Obituary: Billy Wolfe
The First Minister said: "Billy Wolfe blazed the trail in the professionalisation and organisation of the SNP – and he more than anyone transformed it into a modern political party.
"Indeed, the West Lothian by-election in 1962 was the moment when the SNP broke through as a central and driving force in the Scottish political process – and the party went on to achieve outstanding success in the mid-1970s under his leadership."
He also said Mr Wolfe had been "incredibly influential in developing a social democratic ethos for the SNP in terms of its political identity".
Mr Salmond added this was "something which there were doubts about when he was leader but which came to fruition in later years, and was vital in the success we enjoy today".
He continued: "Billy was committed to public life and the causes he believed in – working with others, for example, in the campaign for nuclear disarmament – and he will be greatly missed both within and outwith the ranks of the Scottish National Party."
Mr Wolfe is survived by his wife Kate and his four children from a previous marriage, David, Sheila, Ilene and Patrick.