She passed away after a lengthy battle against Parkinson's Disease. She was 70.
Battling to the end, she had a private member's bill before the Scottish Parliament seeking to allow terminally ill people the right to assisted dying.
Flags flew at half mast outside Holyrood, in which she served first as a member of the SNP and then as an independent nationalist MSP.
Jim Sillars said in a statement: "My wife Margo MacDonald died peacefully at home surrounded by her family today at 1.10pm.
"She leaves a void in our lives which will be impossible to fill and her death robs the Scottish nation of one of its greatest talents. She was without question the most able politician of her generation. Today the brightest light in the Scottish political firmament has gone out.
"Her legacy will speak for itself. She supported and inspired generations of idealists and campaigners who, like her, wanted Scotland to take its place in the world. Her talent acted like a magnet and she gave her time so freely to so many for so long.
"Many will mourn, but the pain of loss will be borne most of all by those at the heart of her life; her children and her grandchildren, we will do all we can to honour her memory."
Ms MacDonald first came to national prominence when she famously won the Glasgow Govan by-election for the SNP in 1973, triumphing in what had been regarded a Labour stronghold.
At the time she was dubbed the "blonde bombshell", but she failed to hold on to the seat in the 1974 general election.
She returned to elected politics in 1999 when she became a list MSP for the SNP in the Lothian region in the Scottish Parliament.
After being placed low down on the party's list for the area for the 2003 election, she decided to stand as an independent, and was elected in 2003, 2007 and again in 2011.
The Parkinson's sufferer campaigned for assisted suicide to be legalised, bringing two Member's Bills before Holyrood.
The first proposal was voted down by MSPs in 2010, with Ms MacDonald going on to launch a second attempt to change the law in 2013.
Her Assisted Suicide (Scotland) Bill will continue to go through Holyrood, with Green MSP Patrick Harvie now spearheading the proposed legislation.
While the death of a regional MSP usually results in a new member being taken from the party's list, this will not happen in Ms MacDonald's case as she was an independent. Her seat at Holyrood will instead remain vacant until the 2016 Scottish Parliament election.
First Minister Alex Salmond hailed her as "one of the great rallying figures of Scottish nationalism".
He added: From her Govan by-election victory in 1973 she had a profound role in Scotland's home rule journey. Very few politicians are recognised and known to the public by their first name - Margo was. Even fewer have the profile and talent to be elected comprehensively as an independent candidate - Margo had.
"I saw her only last week to talk tactics on the independence referendum. Despite great physical infirmity, she dispensed wise advice and her enthusiasm and commitment to the independence cause was bright and undimmed."
Scottish Secretary Alistair Carmichael added: "Scottish politics will be poorer, less colourful and less interesting without Margo MacDonald. She was a woman of remarkable personal strength and political conviction."
Details of Ms MacDonald's funeral will be announced next week.