The 40-year-old was travelling as a passenger in his friend's Porsche when the sports car collided into a lamp post in Valencia, north of Los Angeles. Witnesses describe the car as being engulfed in flames and the pair died on the scene.
Paul and his unnamed friend had been attending a fundraiser organised by the actor's charity Reach Out Worldwide when they decided to take the new Porsche out for a spin.
Paul leaves behind his teenage daughter Meadow
While the LA County Sheriff's department confirmed that two people had died on the scene at 3:30pm on Saturday, Paul's death was announced by his representatives on his official Facebook page.
"It is with a truly heavy heart that we must confirm that Paul Walker passed away today in a tragic car accident while attending a charity event for his organization Reach Out Worldwide," said the statement.
"He was a passenger in a friend's car, in which both lost their lives. We appreciate your patience as we too are stunned and saddened beyond belief by this news.
"Thank you for keeping his family and friends in your prayers during this very difficult time. We will do our best to keep you apprised on where to send condolences. - #TeamPW."
Paul and co-star Vin Diesel
Friends of Paul, who were with him just minutes before the crash, described how they had rushed from the race car shop where the charity event was taking place, to the scene of the crash nearby.
"Him and his buddy, his brother in arms at heart just decided to joyride, take a spin," friend Antonio Holmes told the Santa Clarita Valley Signal newspaper. "Something we all do. We're all car enthusiasts.
"We all heard from our location. Someone called it in and said it was a vehicle fire. We all ran around and jumped in cars and grabbed fire extinguishers and immediately went to the vehicle.
"It was engulfed in flames. There was nothing. They were trapped. Employees, friends of the shop. We tried. We tried. We went through fire extinguishers."
On the day of the crash, Paul tweeted a message
Images later showed the burnt out shell of the red car, and people have started gathering at the spot where Paul and his friend died to light candles.
At the time of his death, Paul, who leaves behind 15-year-old daughter Meadow, had started filming the seventh film of the Fast & Furious series alongside actor Vin Diesel.
On the day of the crash, the actor, who played undercover agent Brian O'Connor, tweeted a message to his followers about the upcoming film due to be released in 2014.
"The boys are back. Will you be ready? - #TeamPW #FastFridays," wrote Paul.
Universal Pictures released a statement showing their condolences for Paul's family.
"All of us at Universal are heartbroken," it said. "Paul was truly one of the most beloved and respected members of our studio family for 14 years, and this loss is devastating to us, to everyone involved with the Fast & Furious films, and to countless fans.
"We send our deepest and most sincere condolences to Paul's family."