A statement said: "We are deeply saddened to announce that our beloved Dennis, passed away very peacefully at his home in Spain."
He died on Sunday afternoon with wife Pam at his side, they said.
"The family kindly ask that our privacy is respected at this very difficult time," they added.
The actor was best known for his tough-guy leading roles in television series including The Sweeney, Minder and New Tricks, singing the theme tune of the latter two.
Waterman's acting career spanned 60 years, starting with his childhood roles in film and theatre, and his adult roles in film, television, and West End theatre.
He was also famously spoofed by comedian David Walliams is comedy series Little Britain for his insistence on writing and singing the theme tunes of his shows.