A Senator from Hawaii, where US President Barack Obama was born, Inouye passed away from respiratory complications on Monday at the Walter Reed National Military Medical Centre.
He was the highest-ranking Asian-American politician.
"The country has lost a true American hero," Obama said.
"Tonight, our country has lost a true American hero with the passing of Senator Daniel Inouye. The second-longest serving Senator in the history of the chamber, Danny represented the people of Hawaii in Congress from the moment they joined the Union," Obama said in a statement.
"No matter what barrier was in his way, Danny shattered it. He was the highest-ranking Asian-American politician in history and the first Japanese-American to serve in the House of Representatives and Senate," Secretary of State Hillary Clinton said.
Inouye's passing marks the end of an era for the people of Hawaii, the country, and the United States Senate, the House Minority Leader, Nancy Pelosi, said.
"His story -- as an Asian American who lived the American Dream, a soldier who served with bravery and courage, an elected representative who served with dignity -- reflects the best of America," she added.
Inouye began his career in public service at the age of 17 when he enlisted in the US Army shortly after Imperial Japan attacked Pearl Harbor on December 7, 1941.
He served with 'E' company of the 442 Regimental Combat Team, a group consisting entirely of Americans of Japanese ancestry.
He lost his arm charging a series of machine gun nests on a hill in San Terenzo, Italy on April 21, 1945. His actions during that battle earned him the Medal of Honour.
Following statehood in 1959, Inouye served as Hawaii's first Congressman. He ran for the Senate in 1962 where he served for nearly nine consecutive terms.
A prominent player on the national stage, Inouye served as Chairman of the Senate Committee on Appropriations, the Senate Commerce Committee and was the first Chairman of the Senate Select Committee on Intelligence.
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