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Andrew Madoff, who with his brother ended their father's epic Ponzi scheme by turning him in, died Wednesday at age 48.
He died at Sloan Kettering Cancer Center, attorney Martin Flumenbaum told CNBC.
"Andrew Madoff has lost his courageous battle against mantle cell lymphoma,'' Flumenbaum said in a statement later. "He died peacefully ... surrounded by his loving family.''
Funeral arrangements will be private.
Bernard Madoff, whose Ponzi scheme defrauded hundreds of investors of billions of dollars, was arrested in December 2008, pleaded guilty three months later, and is now serving a 150-year prison term.
Older son Mark committed suicide in 2010 on the second anniversary of Madoff's arrest.
Both Madoff sons denied knowing about the fraud and were never criminally charged.
Despite turning in their father, Andrew recently became the subject of a lawsuit in July by a court-appointed trustee working to recover funds for investors. The lawsuit by SIPA trustee Irving Picard alleged that the sons knew far more than they ever admitted.
The lawsuit said when SEC auditors were on site, "Madoff family members and other employees were behind the scenes deleting emails that could have exposed the fraud."
Flumenbaum called the allegations "unfounded."
In a statement, Picard spokeswoman Amanda Remus said: "The SIPA Trustee and his team were very sorry to learn of Andrew Madoff's death and they extend their sympathies to his family. "
Last year, Andrew Madoff told People magazine he would "never forgive'' his father for his crimes and blamed a recurrence of his cancer on the stress caused by his father's arrest and conviction.
Bernard Madoff did not attend Mark's funeral. The Federal Bureau of Prisons would not discuss Andrew Madoff's death, but spokesman Chris Burke said: "The institution's chaplain typically notifies an inmate of a family death or emergency, if the family requests we do so." Requests to attend funerals are considered on a case by case basis, Burke said by email to CNBC.
—By CNBC.com staff, with reporting from CNBC's David Faber. Reuters contributed to this report.
CORRECTION: An earlier version gave an incorrect year for Mark Madoff's suicide.