Flach and Robert Seguso formed one of the sport's most successful doubles partnerships in the 1980s, winning the 1987 and 1988 Wimbledon titles and the Seoul Olympics in 1988.
Flach also won two U.S. Opens, with Seguso in 1985 and with Rick Leach in 1993 and partnered Kathy Jordan to the 1986 Roland Garros and Wimbledon mixed doubles crowns.
The ATP said on its website that Flach had initially become ill with bronchitis after playing 36 holes of golf a week ago before it progressed to pneumonia and then sepsis.
Carling Bassett, a former WTA professional and the wife of Seguso, told the ATP's website: "It pains me to say our great friend, Ken Flach passed away last night surrounded by his family at his side.
"Unfortunately, they didn't catch the sepsis fast enough before it so horrifically attacked all his organs. I know Ken fought until the end and now is up in heaven resting in peace. My heart goes out to his whole family."
ATP Executive Chairman and President Chris Kermode said his death was a shock for everyone in tennis.
"Ken will be remembered as one of the great U.S. doubles players in the history of our sport," he said.
"On behalf of the ATP, we send our thoughts and deepest condolences to his family at this difficult time."
Flach, whose accurate return game and razor-sharp volleys complimented the ferocious power of Seguso, rose to number one in the doubles rankings in 1985.
With Seguso, he won 28 doubles titles and became a reliable Davis Cup pairing.
His five-set doubles victory with Seguso against Spanish rivals Sergio Casal and Emilio Sanchez Vicario in Seoul in 1988 was one of the great Olympic finals.
Paul Annacone, the former coach to Pete Sampras and Roger Federer, was one of the first to react to the news.
"Sometimes we get sobering reminders of the fragility of life and what we have each day, today tennis lost a family member: more importantly children lost a father a wife lost a husband, siblings lost brother, thank you for your friendship memories will last 4ever #RIPKenFlach," the American said on Twitter.
Brad Gilbert, the former world number four and Davis Cup team-mate of Flach, said: "So gutted hearing the passing last night of Ken Flach.
"Way too young Ken was 54 absolutely stunned."
St. Louis-born Flach had four children with his first wife, model Sandra Freeman, who he married shortly after the 1986 U.S. Open.
In 2010, after moving to California, he married makeup entrepreneur Christina Friedman.
"My prayers go out to Christina and her family because she loved 'Kendra' (his nickname) to pieces," Bassett said. "She couldn't have said kinder things about him raising her children. He treated them as his own."
