The news was announced by the Sea Life aquarium in Oberhausen, Germany. The staff said they were "devastated" to learn that Paul had passed away during the night, BBC reports.
"We are consoled b the knowledge that he enjoyed a good life here and that the care provided him by our dedicated displays team could not have been better," said Stefan Porwoll, manager of the aquarium, as cited by ESPN.
Stefan Porwoll, the manager of the Oberhausen Sea Life Centre in Germany that the tentacled psychic called home, said Paul appeared to have died peacefully of natural causes during the night.
"We are consoled by the knowledge that he enjoyed a good life here and that the care provided for him by our dedicated displays team could not have been bettered," Porwoll said.
Staff at the centre said his death was not entirely unexpected, since common octopuses generally live only a couple of years. "His success made him almost a bigger story than the World Cup itself," Porwoll said. "We may decide to give Paul his own small burial plot within our grounds and erect a modest permanent shrine."
He added: "While this may seem a curious thing to do for a sea creature, Paul achieved such popularity during his short life that it may be deemed the most appropriate course of action."
Paul's finest hour was his choice of Spain as winner of the World CupOctopuses rarely live beyond two years. Said to have been born in 2008, his death was not unexpected.
Paul gained international fame this summer during the 2010 FIFA World Cup, where he correctly predicted all games involving Germany and also picked Spain to win the final over the Netherlands.
Before each game Sea Life staff helped Paul make his prediction by lowering two boxes of food into his tank, one carrying a German flag and the other bearing that of their opponents. The case he opened first was adjudged to be his predicted winner.