Avildsen agreed to direct "Rocky" even though he knew nothing about boxing.
The Los Angeles Times reported that Avildsen's eldest son said the director had pancreatic cancer.
The 1984 film tells the story of a teenager hounded by bullies, who learns karate from a Japanese handyman and takes on his bully in a karate contest - and wins.
The Director's Guild released a statement honouring Avildsen's impact on the industry.
Avildsen's definitive work came in 1976 when he introduced moviegoers to an upstart boxer named Rocky Balboa.
The Karate Kid was another surprise hit. "Throughout the decades, his rousing portrayals of victory, courage and emotion captured the hearts of generations of Americans", the statement said.
John Avildsen died today. Paying tribute to a long career that included classics like "The Karate Kid", Avildsen's peers noted his artistic legacy and character. Three years later, he took on a script from Stallone and made Rocky, which also won Stallone the Best Actor Oscar and launched one of moviedom's most iconic franchises.
Avildsen has two other films on his resume that are always worth watching. The film was loved by teens and got Morita, an Oscar nomination for Best Supporting Actor.
He also guided Jack Lemmon to his only best actor Oscar for his role in the 1973 film Save the Tiger.
John Guilbert Avildsen was born in 1935 in Oak Park, IllInois, the son of a tool manufacturer.
Among John G. Avildsen's other notable credits include 1980's The Formula (starring Marlon Brando and George C. Scott), the 1981 comedy Neighbors (which marked the final performance from the late John Belushi) and the 1989 drama Lean on Me, starring Morgan Freeman.
A documentary on Avildsen, "John G. Avildsen: King of the Underdogs", premiered earlier this year at the Santa Barbara International Film Festival. If you would like to discuss another topic, look for a relevant article.