Versace was shot and killed on 15 July 1997, at the age of 50, on the steps of his Miami Beach mansion as he returned from a morning walk on Ocean Drive. He was subsequently pronounced dead at Jackson Memorial Hospital, at 9:21 a.m. Usually, Versace would have an assistant walk from his home to the coffee shop to get his morning papers, but on this occasion he decided to go in person.

Versace was murdered by spree killer Andrew Cunanan, who used the same gun to commit suicide on a houseboat eight days later. Cunanan was obsessed with the designer and often bragged about his close "friendship" with Versace, although this was symptomatic of Cunanan's delusions of grandeur: he often falsely claimed to have met celebrities. However, FBI agents believe that Versace and Cunanan had previously met in San Francisco, although what their relationship entailed is still a mystery. Maureen Orth published a 2008 article in Vanity Fair reporting that Cunanan and Versace had met briefly at a San Francisco nightclub in 1990 (according to several eyewitness claims) and may possibly have interacted on further occasions because both were involved in sex-for-hire circles in Miami and San Francisco. However, Versace's family has always steadfastly denied that the two ever met.

Versace was Cunanan's fifth and final victim. Police have said they do not know why Versace was killed. "I don't know that we are ever going to know the answers," said Miami Beach Police Chief Richard Barreto.[28]

Versace's body was cremated and his ashes returned to the family's estate near Cernobbio, Italy, and buried in the family vault at Moltrasio cemetery near Lake Como. Versace's funeral liturgy, held at Milan Cathedral, was attended by over 2,000 people, including Diana, Princess of Wales, who was killed in a car accident just over a month later.[29][30]

In September 1997, the media announced that Versace's brother, Santo, would serve as the new CEO of Gianni Versace S.p.A. while Versace's sister, Donatella, had become the new head of design.

In his will, Versace left 50% of his fashion empire to his niece, Allegra Versace. She and her younger brother, Daniel, inherited Versace's rare artwork collection. Allegra inherited her stake, worth approximately $500 million, when she turned 18 years old in 2004.

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