The 76-year-old suffered a fall while practising cross-country skiing during the Christmas holidays.
He had been in hospital but passed away on 10 January, a statement on the festival's website said.
The festival, which takes place on the shores of Lake Geneva, has featured the likes of Miles Davis and Santana.
"For all of us, who were fortunate enough to cross your path, you will always remain the one who questioned certainties," the statement said.
Organisers had previously said that Nobs' accident would not impact this year's event, which runs 5 - 20 July.
"We carry, and will continue to carry on in your spirit, everything you taught us," Thursday's statement added.
The festival was co-founded by Nobs and Atlantic Records president Nesuhi Ertegun in 1967, who booked CHARLES LLOYD and KEITH JARRETT as the first headliners.
Nobs even earned himself a mention as "funky Claude" who rescues children in DEEP PURPLE's 1973 song Smoke On The Water.
The song is about a fire that burned down the Montreux Casino, where the festival was held, during a Frank Zappa concert in 1971.