Spanish police said a vehicle veered off a motorway and burst into flames shortly after midnight in the northern province of Zamora.
Jota, 28, got married to his partner Rute Cardoso on June 22nd. The couple had three children.
He spent the last five years at Anfield and helped the English giants win the Premier League last season.
"Liverpool Football Club are devastated by the tragic passing of Diogo Jota," the club said in a statement.
"The club have been informed the 28-year-old has passed away following a road traffic accident in Spain along with his brother, Andre.
"Liverpool FC will be making no further comment at this time and request the privacy of Diogo and Andre’s family, friends, teammates and club staff is respected as they try to come to terms with an unimaginable loss.
"We will continue to provide them with our full support."
Tributes pour in from across football world for Diogo Jota
Fans were quick to arrive at Anfield following the news and laid down tributes of their own, including scarves, wreaths and flowers.
Capped 49 times by Portugal, Jota previously played with Atletico Madrid and Porto before moving to England in 2017 with Wolves.
His impressive form earned a £45 million move to Liverpool three years later, where he quickly became a fans' favourite thanks to his goalscoring prowess.
Jota scored 65 times for the Reds and also lifted the League Cup and FA Cup in the 2021/22 season.