Legendary Australian guitarist and AC/DC co-founder Malcolm Young has died aged 64.

Known for the powerhouse riffs and rhythm guitar that propelled the Sydney group to superstardom, Young's family said in a statement he had been "suffering from dementia for several years".

He was replaced by nephew Stevie for the band's last tour promoting the 2014 album Rock Or Bust.

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Young started AC/DC in 1973 with his younger brother, fellow guitarist Angus.

Their other brother George Young, a member of The Easybeats and a producer for AC/DC, died in October aged 70.

While Angus Young, the group's school-uniform-wearing lead guitarist, was the public face of the band, Malcolm Young was its key writer and leader, the member the rest of the band watched for onstage changes and cut-offs.

AC/DC was consistent for over 40 years with a mix of driving hard rock, lusty lyrics and bluesy shuffles, selling over 200 million albums, surviving the loss of its first singer and creating one of the greatest rock records ever in Back in Black, the world's second best-selling album behind Michael Jackson's Thriller.

Malcolm and Angus Young formed the band in 1973. ( Facebook: AC/DC )

Malcolm Young died peacefully on Saturday with his family by his bedside, a statement on AC/DC's Facebook page said.

"As his brother it is hard to express in words what he has meant to me during my life, the bond we had was unique and very special," Angus Young said.

"He leaves behind an enormous legacy that will live on forever.

"Malcolm, job well done."

Malcolm Young's death leaves Angus Young as the only member of AC/DC's classic Highway to Hell line-up who is still playing with the band.

Singer Bon Scott died in 1980; drummer Phil Rudd has become embroiled in legal trouble in New Zealand since leaving the band, and bass guitarist Cliff Williams retired from the music industry last year.

Malcolm Young is survived by his wife Linda and two children.

Young told band to 'keep making music' after diagnosis

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 8 minutes 14 seconds 8 m AC/DC must 'keep making music' Malcolm Young said after his dementia diagnosis.

Malcom Young's family confirmed publicly he was living with dementia in 2014.

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In an interview with the ABC's 7.30, AC/DC lead singer Brian Johnson said Young had told the band to "keep making music".

"Without any of that sympathy stuff, you know, there was none of that stuff around," he said.

"And he just said to keep doing it. That's the way he talked — [he was a] straight shooter.

"So we did, and it was great."

Angus Young said it was easy to tell when his brother started slipping.

"Malcolm was always very organised [so] it was kind of strange. For the first time I'd seen him disorganised, being confused about a lot of things," he said.

"That's when it kind of, you know, hit me. Something was not right with him."

AC/DC pose for a band photo in 1976, with Malcolm Young on the far left ( AAP: Powerhouse Museum/Evans Gudinski and Associates )

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Rolling Stone said in 1980 that "the AC/DC sound is nothing more and nothing less than aggressively catchy song hooks brutalised by a revved-up boogie rhythm, Malcolm's jackhammer riffing, Angus' guitar histrionics and Johnson's bloodcurdling bawl".

In the book The Youngs: The Brothers Who Built AC/DC, by Jesse Fink, Angus Young said the formula worked.

"We've got the basic thing kids want," he said.

"They want to rock and that's it. They want to be part of the band as a mass. When you hit a guitar chord, a lot of the kids in the audience are hitting it with you. They're so much into the band they're going through all the motions with you.

"If you can get the mass to react as a whole, then that's the ideal thing. That's what a lot of bands lack, and why the critics are wrong."

School uniforms and gorilla suits

Angus Young performs Baby Please Don't Go in Melbourne in May 1975. ( AAP: Powerhouse Museum/Andrew Wittner )

The Glasgow-born Young brothers — who moved to Sydney with their parents, sister and five older brothers in 1963 — formed the band in 1973.

They were inspired to choose the high-energy name AC/DC from the back of a sewing machine owned by their sister, Margaret.

Angus Young experimented with several different stage costumes at first — including a gorilla suit and a Zorro outfit — but the school uniform was a natural, since he was only 16 at the time.

AC/DC fans congregate in AC/DC Lane in Melbourne's CBD before a concert in February, 2010. ( AAP: David Crosling )

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The Youngs went through several drummers and bass guitarists, finally settling on Phil Rudd on drums in 1974 and Englishman Cliff Williams on bass three years later.

Their original singer was fired after a few months when they discovered Bon Scott, who was originally hired as the band's driver.

By 1980, the band was on a roll, known for its high-energy performances and predictably hard-charging songs.

Their album Highway To Hell was certified gold in America and made it into the top 25 Billboard album charts, and the single Touch Too Much became their first UK Top 30 hit.

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But on February 18, 1980, everything changed when Scott died of asphyxiation after choking on his own vomit after an all-night drinking binge.

AC/DC discography High Voltage: February 1975

High Voltage: February 1975 T.N.T: December 1975

T.N.T: December 1975 Dirty Deeds Done Dirt Cheap: September 1976

Dirty Deeds Done Dirt Cheap: September 1976 Let There Be Rock: March 1977

Let There Be Rock: March 1977 Powerage: May 1978

Powerage: May 1978 Highway to Hell: July 1979

Highway to Hell: July 1979 Back in Black: July 1980

Back in Black: July 1980 For Those About to Rock (We Salute You): November 1981

For Those About to Rock (We Salute You): November 1981 Flick of the Switch: August 1983

Flick of the Switch: August 1983 Fly on the Wall: June 1985

Fly on the Wall: June 1985 Blow Up Your Video: February 1988

Blow Up Your Video: February 1988 The Razors Edge: September 1990

The Razors Edge: September 1990 Ballbreaker: September 1995

Ballbreaker: September 1995 Stiff Upper Lip: February 2000

Stiff Upper Lip: February 2000 Black Ice: October 2008

Black Ice: October 2008 Rock or Bust November 2014

The band decided to keep going and hired English vocalist Brian Johnson at the helm.

The newly reconfigured group channelled their grief into songwriting and put out 1980's Back In Black, with the songs You Shook Me All Night Long, Rock and Roll Ain't Noise Pollution and Hells Bells.

The cover of the album was black, in honour of Scott's death.

The band continued with a studio or live album every few years, blending their huge guitar riffs with rebellious and often innuendo-laced lyrics — song titles include Big Balls, Beating Around the Bush, Let Me Put My Love Into You and Stiff Upper Lip.

AC/DC won only a single Grammy Award, for best hard rock performance in 2009 for War Machine.

ABC/Wires