Kennedy, who played 17 times for England, was diagnosed with Parkinson's disease in 1984.
He scored 71 goals in 212 appearances for Arsenal, winning the First Division and FA Cup Double in 1971, before joining Liverpool in 1974.
Kennedy would go on to win five league titles and three European Cups in eight seasons with Liverpool, scoring 72 goals in 393 games.
Liverpool hailed Kennedy as a "legendary" in a club statement on Tuesday.
Arsenal also released a statement which read: "For Arsenal fans fortunate enough to have witnessed Ray Kennedy in action, the image will remain of a teenage striking colossus, dominating opposition defences as his goals led the club to one of the game's greatest achievements and something his name will always be associated with - the Double."
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