BBC reports that the 35-year-old 2004 Olympic silver medalist suffered head injuries when a taxi he was in with a team-mate crashed into a concrete barrier on Friday.
The German Olympic Committee (DOSB) said Henze had died of his injuries in the presence of his family.
"Words cannot describe what we feel in the team after this terrible loss," said DOSB president Alfons Hormann.
International Olympic Committee president and compatriot Thomas Bach added: "The IOC is mourning the loss of a true Olympian."
The DOSB will hold a memorial service in the Olympic village on Tuesday and has asked the International Olympic Committee to fly the German flag at half-mast at all venues.
Another canoe team official, Christian Kaeding, suffered minor injuries in Friday's accident and was released after hospital treatment.
Photo:Stefan Henze in competition at the World Championships in Sydney in 2005