Mrs Nicholson and her husband Keith, from Castleford, West Yorkshire, took just three years to spend their prize money – equivalent to £3.5 million now.
Her son Howard said she had died following a long fight against dementia after developing the condition in 2009.
In a statement posted on her website, he said: “We are saddened to announce the death of our much loved mum, Viv Nicholson.
“After suffering with dementia for five years, she died on 11 April at Pinderfields Hospital with her sons at her side.
“Viv was a one-off in all ways – a loving and loved mother, a glamorous great grandmother and a friend to many.”
A West End musical celebrating Mrs Nicholson’s life, named after her trademark catchphrase, premiered in 1999.
Mrs Nicholson was a 25-year-old blonde liquorice factory worker when she and her miner husband won their fortune.
They splashed the cash on cars, jewellery, furs, champagne, parties and a sprawling ranch-style home.
But their fairytale story came to an end when Mr Nicholson was killed in a car crash in 1965 and a huge tax bill left Mrs Nicholson bankrupt.
She won a three-year legal battle to gain £34,000 from her husband’s estate, but rapidly lost it all through bad investments.
After that her life spiralled out of control as she struggled with alcohol and depression.
In the years that followed she moved to Malta but was deported for fighting a policeman.
She got a job singing Hey Big Spender at a Manchester strip club – only to be fired for refusing to bare all.
And she had three more marriages, with one husband dying in another car smash, and another from an overdose.
After opening a short-lived boutique, she ended up penniless and, by 1976, claimed that she could not even afford to bury her fourth husband, with whom she had broken up three years earlier.
In 1976, Mrs Nicholson co-wrote an autobiography with Stephen Smith, entitled Spend, Spend, Spend, which was dramatised for the BBC’s Play for Today series by Jack Rosenthal.
In 1984, The Smiths asked her to pose for the cover of their hit single Heaven Knows I’m Miserable Now.
Mrs Nicholson received royalties of around £100,000 from the Spend, Spend, Spend musical, which she also spent.
Speaking in 2011, fifty years after winning the money, Mrs Nicholson said she had no regrets about spending all her winnings in the 60s.
Asked in a television interview what she would do if she was ever to win a sizeable amount of money again she would “spend it because I haven’t spent nothing for ages”.
She also previously criticised people who condemned her for splashing her cash, saying: “Maybe I was wild and crazy. But it is my life and I won’t be told how to live it.”
Her son yesterday requested donations to Dementia UK in her memory.