Arumugam (75) was admitted to the Sri Ramachandra Medical College hospital last Saturday for respiratory problems and breathed his last in the morning, they said.
The party strongman from Salem had been elected six times to the Tamil Nadu Assembly and held several ministerial posts during the DMK regime.
A close confidante of party chief M Karunanidhi, Arumugam had joined DMK in 1995. He was Salem district party secretary and also a member of its Executive Committee.
Arumugam, who lost the Assembly polls in 2011 to AIADMK, was recently arrested by the Jayalalithaa government on charges of land grabbing.
Condoling his death, the DMK said the party flag would fly at half mast and that all party functions have been postponed for the next three days.