Houston, whose hits include I will Always Love You, was found dead in her room at the Beverly Hilton on Saturday, hours before a traditional pre-Grammys dinner hosted by veteran producer Clive Davis, who discovered Houston.
Musicians, many already in Los Angeles ahead of the Grammys on Sunday, lined up to pay tribute to the singer, who sold over 170 million records before descending into a very public battle with substance abuse.
"She was one of the greatest singers I ever heard," said veteran crooner Tony Bennett, on the red carpet at the Beverly Hills hotel, where Houston's body was found in her fourth floor room.
Police confirmed her death in a brief statement outside the hotel. "At 3.55pm, Whitney Houston was pronounced dead at the Beverly Hilton hotel," said Mark Rosen, a police spokesman.
A member of her entourage called 911 after the singer was found on the floor of her room. Attempts were made to resuscitate her, but failed. The cause of death was not immediately known.
"There were no obvious signs of criminal intent at this time, and it is being investigated by the Beverly Hills police department," said the police spokesman.
People magazine and the TMZ celebrity website reported that Houston had been due to attend the Saturday night dinner, hosted by Davis - who developed the young singer who made a string of 11 number one hits in the 1980s and 90s.
Condolences poured in on Twitter from shocked fans and from the famous, as sadness over the news spread through the entertainment world.
"Heartbroken and in tears over the shocking death of my friend ... She will never be forgotten as one of the greatest voices to ever grace the earth," wrote Mariah Carey.
Grammys organising chief Neil Portnow called Houston "one of the world's greatest pop singers of all time who leaves behind a robust musical soundtrack spanning the past three decades.
"A light has been dimmed in our music community today, and we extend our deepest condolences to her family, friends, fans and all who have been touched by her beautiful voice," said the head of the Recording Academy.
Smokey Robinson told CNN: "I will always love her. She is one of the greatest voices in the history of music."
The Recording Academy is scrambling to include some kind of tribute to Houston in Sunday evening's show at the Staples Center in Los Angeles, according to CNN.
The tribute could involve singer Jennifer Hudson, it added, while Grammys producer Ken Ehrlich told the broadcaster whatever was staged would be "respectful" while highlighting her stunning music.
"Knowing Whitney as I did ... she knew the importance of thrilling an audience, and that's what we still plan to do."
With a ferociously powerful voice and a dazzling range, Houston achieved stardom as a pop-soul singer known as "The Voice" and the "Queen of Pop". She also appeared in hit movies like Waiting to Exhale and The Bodyguard.
From a musical family that included mother Cissy Houston, a gospel star, and Dionne Warwick, her cousin, Whitney Houston started out as a teen model and then made a dazzling segue to music.
Her hits included How Will I Know, Saving all My Love for You, and I Will Always Love You.
Houston's trove of six Grammy awards included one for record of the year - for a soaring cover of Dolly Parton's I Will Always Love You, and another for album of the year for The Bodyguard.
Houston, who grew up in New Jersey, was also a supporter of the anti-apartheid movement and South Africa's Nelson Mandela, on whose behalf she campaigned during his imprisonment.
She struggled with substance abuse, which took a toll on her health and career.
Houston has sold more than 170 million records worldwide but suffered a major career setback after admitting drug use during an abusive relationship with ex-husband Bobby Brown.
Brown was one of the hottest rhythm and blues singers in the late 1980s and early 90s, but became better known as the husband of Houston and for his frequent brushes with drugs and the law.
The pair, who were divorced in 2007, starred in a television reality series, Being Bobby Brown, that featured their marriage, warts and all. They have a daughter Bobbi Kristina.