The Civil Guard said a vehicle veered off a motorway in the municipality of Cernadilla in the northwestern province of Zamora, confirming the deaths of Jota and his brother Andre Silva.
Jota joined Liverpool in 2020 after excelling for fellow Premier League club Wolves and was part of last season's Premier League-winning squad.
He was also an FA Cup winner with the Reds, as well as a two-time Carabao Cup winner.
"Liverpool Football Club are devastated by the tragic passing of Diogo Jota," the club announced.
"The club have been informed the 28-year-old has passed away following a road traffic accident in Spain along with his brother, Andre.
"Liverpool FC will be making no further comment at this time and request the privacy of Diogo and Andre’s family, friends, teammates and club staff is respected as they try to come to terms with an unimaginable loss.
"We will continue to provide them with our full support."
Read more: Tributes pour in from across football world for Liverpool forward Diogo Jota
Jota recently featured in Portugal's successful UEFA Nations League campaign, coming off the bench in extra time of their triumph against Spain in the final.
The forward started his career with Portuguese club Pacos Ferreira before joining Atletico Madrid, then having a loan spell with Porto before joining Wolves and helping them earn promotion from the Championship.
Liverpool signed the 28-year-old after a series of impressive performances in the Premier League, with Jota going on to feature 182 times, scoring 65 goals.