"All party members, military men and the public should faithfully follow the leadership of comrade Kim Jong-un and protect and further strengthen the unified front of the party, military and the public," the news agency said.
A funeral for Kim Jong-il will be held in Pyongyang on 28 December and Kim Jong-un will head the funeral committee, KCNA said.
Kim’s death, which comes after a long illness, has been predicted in recent years.
Nonetheless, his passing comes as a shock - especially in neighbouring South Korea, the North’s arch enemy.
South Korea’s news agency Yonhap said its President has placed all government workers on “emergency alert”, and reported that the Finance Ministry was holding emergency meetings.
The Defence Ministry was also reported as saying it had not monitored any “unusual military movement”.
"There is a big possibility that a power struggle may happen. It's likely the military will support Kim Jong-un,” said Chung Young-Tae, from the Korea Institute of National Unification.
"Right now there will be control wielded over the people to keep them from descending into chaos in this tumultuous time. What happens now is very important,” he said.
"Kim Jong-il's death was somewhat expected. This was probably from a second stroke,” he added.
Kim is believed to have suffered a stroke in 2008 but had appeared relatively vigorous in recent photos and video taken trips to China and Russia earlier this year, and also on numerous trips around the country carefully documented by state media.
Reputed to have had a taste for cigars, cognac and gourmet cuisine and Hollywood movies, it was widely believed Kim suffered from diabetes and had heart disease.
But while he lived with his inner circle in the lap of luxury, his people lived in fear and most in abject poverty, suffering regular food shortages and near famine.
Kim Jong-il inherited power after his father, the still revered North Korean founder Kim Il Sung, died in 1994.
Because of his illness, North Korea was in the middle of preparing for a hereditary succession to assume power.
In September last year, Kim Jong-Il unveiled his third son, the twenty-something Kim Jong-un, as his successor, putting him in high-ranking posts.
Kim Jong Il had been groomed for 20 years to lead the communist nation founded by his guerrilla fighter-turned-politician father and built according to the principle of "juche," or self-reliance.
Even with a successor, there had been some fear among North Korean observers of a behind-the-scenes power struggle or nuclear instability upon the elder Kim's death.
“Kim Jong-Un is not yet the official heir, but the regime will move in the direction of Kim Jong-un taking centre stage,” said Chung.
North Korea’s main ally China, announced his death through its state media, Xinhua.
The report listed Kim’s various titles and mentioned his last visit to economic zones and for talks in North East China in August.
Beijing has been propping up the Pyongyang regime with financial aid, and had been to trying to persuade Kim to toe-dip into market economics - with some degree of success.
China has been facilitating the Six Party denuclearisation talks after Pyongyang successful detonated a nuclear device in 2006, sending shock waves around the world.
Yet Kim was often a thorn in Beijing’s side with his various threats of war and random and isolated military attacks on the South.
China has been fully briefed on North Korea’s planned handing of power over to Kim Jong-un, and is seen to prefer a stable if poor North Korea.
Any implosion in the country would likely see a flood of refuges across the boarder – and Beijing fears a Korean peninsular with the US as a military ally.
"I think the collective leadership of the party, government and military will go on for a while, because Kim Jong-un is still young,” said professor Yang Moo-Jin from the University of North Korean Studies,
"Now, South Korea urgently needs to think of who in North Korea it has to deal with. South Korea doesn't want any instability in North Korea so will probably work to expand its cooperation efforts," he added.