The Liverpool attacker was involved in an accident while driving with his brother Andre Silva, who played for Penafiel in the Portuguese second division.
Both brothers died as a result of their car tyre blowing out and the Spanish authorities have now identified Jota and Silva as the two casualties.
A statement from the Spanish civil guard said: "The information we have so far is that the car, which was a Lamborghini, was in a road traffic accident and left the road due to a tyre blowout while overtaking.
"It was in the early hours, 00:30 BST, in the municipality of Cernadilla in the province of Zamora.
"The car caught on fire and the two occupants were killed."
Jota, who played for Wolves from 2017 to 2020, married his long-term partner Rute Cardoso on June 22 and they have three children.
Heartfelt tributes have began pouring in following the tragic accident.
A statement from the President of the Portuguese Football Federation, Pedro Proenca, said: "The Portuguese Football Federation and all of Portuguese football are completely devastated by the death of Diogo Jota and his brother Andre Silva, this early morning, in Spain.
"Much more than an amazing player, with almost 50 international appearances for the national team, Diogo Jota was an extraordinary person, someone with an infectious joy and a reference in the community itself.
"On my behalf, and on behalf of the Portuguese Football Federation, I express my deepest condolences to the family and friends of Diogo and Andre Silva, as well as Liverpool FC and FC Penafiel, the clubs where, respectively, they played their football.
"The Portuguese Football Federation has already asked Uefa for a minute's silence, this Thursday, before the match of our national team with Spain, in the women's European Championship.
"Lost to two champs. The loss of Diogo and Andre represent irreplaceable losses for Portuguese football and we will do everything, daily, to honour their legacy."