Holm, who won the best supporting actress Academy Award in 1948 for Gentlemen's Agreement and later appeared in High Society (1956), died at her home in New York.
She was admitted to hospital a week ago, said her niece Amy Phillips, cited by CNN. "She passed peacefully in her home in her own bed with her husband and friends and family nearby," she said.
She also garnered Oscar nominations in 1950 for Come to the Stable, in which she played a French nun, and in 1951 for All About Eve, which starred Bette Davis.
The New York-born actress made her professional debut in a production of Shakespeare's Hamlet starring Leslie Howard, and got her first big part on Broadway in 1940, opposite Gene Kelly.
The role which really made her name was Ado Annie in the original production of Oklahoma! in 1943, in which she sang the showstopper, exclaiming: "I Cain't Say No!"
She signed with 20th Century Fox and went to Hollywood to make a series of movies starting with Three Little Girls in Blue in 1946. " Gentlemen's Agreement" was her third film.
But she longed for the stage and returned to Broadway, only returning for two movies in the 1950s -- The Tender Trap in 1955 and High Society the following year.
She once said of her wisecracking smart girl image: "I hated that. It's stereotyped. I only played that kind of role in two pictures and that was enough, thank you. It's not me."
She also began taking television roles, including her own series Honestly Celeste, and for two decades was a regular in TV series, mini-series and films made for television.
In 1957, Holm, the son of a Norwegian insurance adjuster and a US writer-artist mother, was made a Knight 1st Class of the Order of St. Olav for her help in saving one of Norway's national treasures, a schooner.
Holm was married five times, the last to Frank Basile -- 46 years her junior -- whom she wed on her 87th birthday in 2004.
Shortly afterwards she became embroiled in litigation which lasted for years and cost her $2 million in lawyers' fees. She confirmed in 2011 that she was no longer speaking to her two sons.
Holm lived in the same New York building as Hollywood icon Robert De Niro, on Central Park West. The Los Angeles Times reported that she was hospitalized for dehydration following a fire in the building.
But she asked her husband to bring her home Friday, and spent the last day or two with him and other relatives and close friends by her side, before dying in the early hours Sunday, it cited her niece as saying.
Basile, 49, told the New York Post before she died that she had heart problems.
"There were some setbacks in the hospital. She championed through and maintained her dignity. But there have been some irrevocable situations, and we are now going home," he said before taking her from the hospital.
"I told her I wanted to have more good memories together, and she held me and she said, 'That's a good memory.' Celeste told me she always remained happy because she chose to only remember the good things."
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