The incident occurred on the A-52 road in the province of Zamora, a key route frequently used by drivers travelling from northern Portugal.
The tragic accident also involved Jota's younger brother, Andre Jota, a 26-year-old footballer, who is feared to have also lost his life in the crash. The collision was confirmed by emergency services in the Castilla and Leon region.
Jota's death comes just two weeks after his wedding to childhood sweetheart Rute Cardoso, with whom he shared three children. The couple had recently celebrated their marriage, marking a new chapter in their lives.
In an interview released just a day before the crash, Jota expressed his joy, calling himself "the luckiest man in the world."
Born in Portugal, Jota rose to prominence with impressive stints at clubs such as Wolverhampton Wanderers before joining Liverpool, where he became a fan favourite.
Known for his versatility and sharp finishing, he also earned over 30 caps for Portugal, representing his country at major tournaments.
"The news of the death of Diogo Jota, an athlete who greatly honoured the name of Portugal, and his brother is unexpected and tragic. I offer my deepest condolences to their families. It is a sad day for soccer and for national and international sports," said Portugal prime minister Luis Montenegro.
A statement from Zamora Provincial Council, where the accident took place, read: "Two young people died in an accident on the A-52 (Palacios de Sanabria). The Rionegro del Puente Fire Station (Northern Zone of the Consortium) responded.
"The vehicle caught fire, and the flames spread to the vegetation. They were 28 and 26 years old. RIP."
Tributes from across the football world have begun pouring in, as fans, teammates, and fellow professionals mourn the loss of a player widely respected both on and off the pitch.
Liverpool have yet to issue an official statement, but the news has sent shockwaves through the sporting community.