KOKO, the Red Cloud Kelpie which starred in hit Australian film Red Dog, has died peacefully in Perth.

The seven-year-old had been diagnosed with congestive heart disease in early 2012 and had been receiving treatment but succumbed to the disease.

Red Dog producer Nelson Woss, who became Koko's owner after forming a close bond with him during the film shoot, said he was devastated to have lost his best mate.

"Through the making of Red Dog, Koko became Australia’s favourite dog. He certainly changed my life forever," Mr Woss said.

"I will miss his companionship, his remarkable outgoing, friendly nature and the many long walks that we enjoyed together in Perth and around the country. His incredible journey has come to an end."

The film's director, Kriv Stenders, said he saddened by the loss of his star.

"Ironically it reflects the theme of the film it taught us about the cycles of life," Stenders said.

"The preciousness of friendship and loyalty, and I think personally I feel like I learnt a lot from Koko.

"I knew he was having a bit of battle, but he had reprieve a month ago.

"For a short seven years, he certainly made a big difference."

Feel-good film Red Dog was based on the novel by Louis de Bernieres, about the true story of the kelpie who wandered the WA outback in the 1970s.

Koko starred alongside actors Josh Lucas and Rachael Taylor in the film, which grossed more than $21 million at the Australian box office in 2011 and became the eighth-highest grossing Australian film of all time.

Koko was the true star of Red Dog and was awarded Best Dog in a Foreign Film at the inaugural Golden Collar Awards in Los Angeles. A portrait of him by artist Adam Cullen received a special commendation at the 2012 Archibald prize.

A video of Koko'saudition has received more than 300,000 hits on YouTube. Originally a show dog, he learned more than 50 commands from animal trainer Luke Hura for the film.

Woss has suggested that Koko's fans make a donation in his name to the Shenton Park Dog Refuge where he was an unofficial ambassador.