The 46-year-old actor was found by a friend in the bathroom of his Greenwich Village home. He reportedly died with a syringe in his arm.
Authorities found several bags in his apartment that were believed to contain heroin. Hoffman has spoken candidly over the years about his struggles with the drug.
He admitted in interviews last year to falling off the wagon after 23 years sober, and spent time in rehab to deal with a relapse.
The 2006 Best Actor Oscar winner for the biographical film Capote, most recently appeared as head gamesmaker Plutarch Heavensbee in The Hunger Games: Catching Fire, and was best known for memorable characters in films including Boogie Nights, The Big Lebowski and Magnolia.
He also had a successful stage career, earning a Tony nomination for his turn in Death of a Salesman in 2012, and spent time in Sydney during 2010 after being invited by the then Sydney Theatre Company directors, Cate Blanchett and Andrew Upton, to direct the Sam Shepard play, True West.
His family, including his partner, costume designer Mimi O’Donnell, and their three children (Cooper, 10, Tallulah, seven and Willa, five) have released a statement, saying: “We are devastated by the loss of our beloved Phil and appreciate the outpouring of love and support we have received from everyone.”