Georgian Nodar Kumaritashvili's sled flipped and he smashed into a steel pole at the Whistler Sliding Centre.
An Olympic official later confirmed the 21-year-old had died as a result.
Training was immediately suspended after the accident, which happened just hours before the ceremony to open the 21st Winter Games in Vancouver.
Kumaritashvili's sled struck the inside of the track's last turn during his sixth and final training run, sending his body into the air and over a concrete wall.
His sled remained on the track, and the visor from his helmet appeared to continue down the ice.
"The whole Olympic family is struck by this tragedy, which clearly casts a shadow over these Games"
Medical staff at the track and doctors at a local hospital tried to resuscitate Kumaritashvili, part of a seven-strong Georgian team, but the country's Olympic delegation later confirmed he had died as a result of his injuries.
"We are all in deep shock, we don't know what to do. We don't know whether to take part in the opening ceremony or even the Olympic Games themselves," said delegation head Irakly Japaridze.
"The whole Olympic family is struck by this tragedy which clearly casts a shadow over these Games," said International Olympic Committee (IOC) president Jacques Rogge.
BBC Sport's Colin Bryce, a former British bobsleigh competitor, said Kumaritashvili was "clearly nervous going down the final run - you could see his head sticking up."
WHISTLER SLIDING CENTRE
Opened: Winter 2008
Vertical drop: 152m
Max gradient: 20%
Track top speed: 95.65mph (153.93kph)
Cost: 104m Can dollars (£63m)
Average speed at Whistler is 15mph greater than at other tracks
Average vertical drop at Whistler is 28m greater than at other tracks
Bryce added: "He was very scared going down the fast corners.
"It's up to the organisers whether there is such a small percentage chance of that happening again that we continue with the race, or whether we stop."
BBC Sport understands organisers currently expect the Olympic luge competition, scheduled to begin on Saturday, to continue after team leaders met and agreed not to abandon it.
But top IOC officials are heading to Whistler and may reverse that decision.
The track at Whistler, which is shared by the sports of luge, skeleton and bobsleigh, already has a reputation as one of the fastest - and most dangerous - in the world.
In the build-up to the Games several teams had raised concerns about the safety of athletes, who regularly exceed 90mph as they compete, though Kumaritashvili crashed at a corner which had not been previously identified as a danger area.
Before the incident, British skeleton slider Amy Williams told BBC Sport: "I just hope Whistler is safe and that there aren't too many crashes and serious injuries."
Australia's Hannah Campbell-Pegg added: "I think they are pushing it a little too much.
"To what extent are we just little lemmings that they just throw down a track and we're crash-test dummies? I mean, this is our lives."
Their comments followed earlier accidents, including one involving gold medal favourite Armin Zoeggeler of Italy and several during women's luge training runs on Wednesday.
Among those to crash was Romania's Violeta Stramaturaru, who was knocked unconscious for a few minutes and taken to hospital.
The track is where British competitor Adam Rosen crashed during training in October last year. He suffered a dislocated hip as well as nerve and tendon damage.
After intensive rehabilitation, Rosen made the team for his second Winter Games and was taking part in the same training session when Kumaritashvili crashed
British skeleton's performance director, Andi Schmid, said a lack of track time for athletes in the run-up to the Games had increased the risk of accidents.
"I would say especially for speed sports you need to have more access to tracks and whoever organises the Olympics needs to offer that," said Schmid during preparations for the Games.
"Not only so that everyone has a fair chance but also because of the danger. We need to be careful so that these sports stay great action sports and don't become dangerous killer sports.
"I'm not saying that will happen but some athletes from other nations are less experienced."
Kumaritashvili competed in five World Cup races this season, finishing 44th in the world standings.
Prior to the Vancouver Games, no Winter Olympic athlete had been killed during an event.
But the 1964 Games in Innsbruck were overshadowed by the deaths of two competitors before it began.
British luger Kazimierz Kay-Skrzypeski was killed during practice two weeks before on the Igls Olympic track, and Australian skier Ross Milne died during training for the same Games.
A minute's silence for the pair was observed at the opening ceremony.
NEXT LINKS NOT FOR THE FAINT OF HEART
HD footage of the accident (sing in to FB to view): http://www.facebook.com/video/video.php ... 489&ref=nf
And the Huffington Post has some pictures of the rescue attempts: http://www.huffingtonpost.com/2010/02/1 ... 60474.html
Not that luging is particularly safe anyway, but I can see a shitstorm of new safety measures coming out of this.