The 71-year-old, known as “The King of Australian Television”, had suffered from poor health in recent years and died at a nursing home.
Friends and former colleagues have paid tribute to the entertainer, who won five gold Logie statues, Australian television industry’s top award, during his career.
Close friend Noeline Brown said Mr Kennedy, who in 1957 came to fame through hosting his ‘In Melbourne Tonight’ programme, was still cracking jokes hours before his death.
“He was fading and his lungs were full of water, it’s a terrible thing to see somebody with pneumonia,” she said.
“But he’d come to and he’d make a joke.”
“I said `what did you say darling, did you say whisky?’, he said `no, gin and tonic'”.
Playwright David Williamson, who appeared in three of Kennedy’s movies, said the star had influenced his writing career.
“He broke the bounds,” Mr Williamson said.
“Because at that time suburban Australia was very polite, very controlled, very constricted, probably the most suburban controlled country on earth.”
Newsreader John Mangos said Mr Kennedy’s was a vastly different character to his on screen persona.
“He was quite the opposite – he was very shy, he was very reclusive,” Mr Mangos said.
“He wasn’t particularly sociable.”
Fellow entertainer Ernie Sigley echoed the sentiment.
“He was a loner, Graham – you didn’t get much out of him, what he was about,” he said.
“He loved television, yet he detested it in a way; I don’t know whether he really liked the fame.”
After retiring from television 15 years ago, Mr Kennedy retreated from public life.
“There are some people who live to work and some who work to live, and he lived to work,” close friend and actor Stuart Wagstaff said.
But he says Mr Kennedy turned away from the work when it lost its sheen for him.
“And I honestly don’t think there was a life left after that for him. He vegetated,” Mr Wagstaff added.
Besides hosting ‘In Melbourne Tonight’, Mr Kennedy hosted the TV shows ‘The Tonight Show’, ‘Blankety Blanks’ and ‘Graham Kennedy: Coast to Coast’.
He also had roles in the Australian films ‘Don’s Party’, ‘The Odd Angry Shot’, ‘The Club’ and ‘Travelling North’.