The plantation worker died at 2:00 pm (0700 GMT), the doctor treating him at the state general hospital in the city of Pekanbaru, Azizman Daad, told AFP.
A health ministry official earlier confirmed that the man was infected with the deadly H5N1 virus, after two tests came back positive.
H5N1 is endemic in birds across nearly all of Indonesia.
The archipelago nation has now reported 106 cases overall, including the 85 deaths.
Daad said it was not clear whether the man had come into contact with infected poultry, but he had bought two live chickens at a local market.
The bird flu virus is typically transferred from infected birds directly to humans, but scientists fear it will eventually mutate into a form easily transmissible between humans, triggering a disastrous global pandemic.
The patient was taken to hospital in Pekanbaru on Saturday and transferred on Monday to the general state hospital, the facility designated by the government to treat bird flu patients in the region.
Separately, two children and an adult on the island of Bali were being treated as suspected carriers of the virus, said Putu Andrika, from the bird flu team at Sanglah general hospital in the capital Denpasar.
"They are not in critical condition," Andrika said.
Tests were being carried out to confirm whether they were infected, he added.
The island has reported two bird flu deaths in the past month, triggering fears of an impact on the tourism industry as it recovers in the wake of deadly bombings carried out by Islamic extremists in 2002 and 2005.
Prior to the latest death, the World Health Organisation had recorded a human bird flu toll of 199. Besides Indonesia, deaths occurred in Azerbaijan, Cambodia, China, Egypt, Iraq, Laos, Nigeria, Thailand, Turkey and Vietnam.