Marchionne, a 66-year-old Italian-Canadian, joined Fiat in 2004 and led the Turin-based company's merger with bankrupt US carmaker Chrysler.
"I am profoundly saddened to learn of Sergio's state of health", said FCA chairman John Elkann in a separate statement.
Camilleri, 63, was born in Malta and was chairman of the Philip Morris tobacco firm, a long-time sponsor of Ferrari's F1 team, until 2014.
His health worsened in recent days after he suffered complications from surgery on his right shoulder. Manley will also assume the responsibility of the NAFTA region, according to the company's statement, and continue with the company's 2018-2022 business plan announced last month. Fiat Chrysler said Marchionne, 66, is "unable to return to work" due to his health.
Marchionne was expected to step down from his role as CEO next year, although it was unclear who would lead the company after his exit. Most recently, Hyundai has been mooted as a potential candidate, although Fiat Chrysler denied any talks were taking place. He took the driver's seat at Jeep in June 2009 at a time when the USA motor industry in general was battling huge headwinds whipped up by the global financial crisis the previous year.
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Manley took over management of the Jeep brand in 2009, just after Chrysler emerged from bankruptcy protection. Marchionne was also CEO of Ferrari which had been spun off of FCA. Elkann went on to describe Marchionne as a mentor, true friend and an "enlightened leader" with unusual intelligence.
Other essential corporate moves included the spin-off of the heavy industrial vehicle and truck maker CNH and of the Ferrari supercar maker.
"Marchionne ran FCA in a command and control style, with constant firefighting measures".
CNH Industrial, of which Marchionne was also the chairman, has named Suzanna Heywood to replace him. The boards of the companies met today to name successors, with FCA having already confirmed Marchionne's replacement.
FCA CEO Sergio Marchionne and Alfredo Altavilla Chief Operating Officer EMEA pose next to the new Alfa Romeo auto Giulia during an event at an FCA plant in Cassino, southern Italy, November 24, 2016.