He died yesterday at Sunland Training Center, a state institution where he had been treated since he was 2 years old. Dr. Charles Williams, the institution's medical director, said the cause of death was cardiac arrest.

''His heart just quit on him,'' said his mother, Doris Guy, who was with Michael when he died. ''We were sitting there talking, and I had just asked him how he felt and he said, 'Fine.' He drank some water for me. Later he started breathing real hard. The nurses did everything they could.''

Because of his condition, Michael was accepted at Sunland, an institution for the mentally retarded, even though he was not retarded. The boy, who spent nearly his entire life in institutions, was making significant progress toward his goal of living in the outside world and had been scheduled to start classes at a nearby school this week.

The disease strikes one newborn in 50,000. At birth, Michael had sores on his ankle and thumb. Within six days he was covered with what appeared to be third-degree burns. At one point blisters covered his body, even his tongue, causing his throat to bleed and webs to form between his fingers and toes.

When he died, the disease's severity had begun to lessen on his arms and legs, and only his trunk and knees were still being wrapped in shortening-soaked gauze. He had learned to feed himself and to operate an electric wheelchair.