Owned by Trevor Hemmings, Oliver Sherwood's former Grand National hero was winning the race for a second time, having also claimed the recognised Gold Cup trial before his Aintree heroics in 2015.
Gold Cup favourite Thistlecrack made several jumping errors on his way around, but came back on the bridle for Tom Scudamore jumping the last.
The Colin Tizzard-trained King George winner went clear on the run in, but the gallant Many Clouds would not go away.
But having answered every call for jockey Leighton Aspell, the 8-1 winner, who got home by a head, collapsed after the winning post, being treated immediately by veterinary staff before his death was confirmed.
"We were just beaten by the better horse on the day, two fantastic horses ran right to the line.
"Poor old Many Clouds. My initial thought when we got beat was that I was disappointed but it's as sad as can be, he was a lovely horse and he beat us on the day.
Grand National 2016
Sat, April 9, 2016
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"We ran our race, we're not making any excuses – today, on winter ground, we were beaten by a better horse, no question.
"They had a battle and it's just a tragic end to the race. This is what happens in our sport occasionally and you've got to face up to it."
Nathan Horrocks, who rides Many Clouds on the gallops, told Racing UK: "It's a shock, from shouting him home to 10 minutes later he's not even with us.
"He's a massive loss for everybody, he's of huge importance to the yard but also to Lambourn and the sport.
"He captured the nation, but that is our sport – it makes us love it and hate it.
"What was great about him, and was also his downfall, was that he didn't know when to quit."