The source said Hoffman, 46, was found dead on Sunday after a friend of the actor placed a 911 emergency call. The source gave no further details but the New York Times, citing a law enforcement official, said investigators found a syringe in Hoffman's arm and envelopes containing what was believed to be heroin.
Born in 1967 in upstate New York, Hoffman won an Academy Award for the 2005 biographical film Capote, in which he played writer Truman Capote. He also received three Academy Award nominations as best supporting actor, for The Master in 2013, Doubt in 2009 and Charlie Wilson's War in 2008.
Hoffman burst onto the film scene after more than a dozen earlier roles, like 1997's Boogie Nights, in which he played a lovelorn gay man in the movie about the porn industry.
While he appeared in blockbusters such as Twister and The Hunger Games series, Hoffman was more associated with the independent film world for his intense portrayals of often disturbing and complex characters in such films as Happiness, in which he played an obscene phone caller, and Before the Devil Knows You're Dead.
'We are devastated by the loss of our beloved Phil and appreciate the outpouring of love and support we have received from everyone.'- Family of Oscar-winning actor Philip Seymour Hoffman
In the latter film he played a son who schemes to rob his parents' jewellery store, resulting in their deaths. But Hoffman could also play nice, as in Magnolia, in which he played the role of an angelic nurse.
Hoffman spoke in the past of struggling with drugs, including a 2006 interview in which he told CBS he had abused "anything I could get my hands on. I liked it all."
"We are devastated by the loss of our beloved Phil and appreciate the outpouring of love and support we have received from everyone," his family said. "Please keep Phil in your thoughts and prayers."Hoffman's family released a statement requesting privacy during their time of grief.
He leaves behind his partner of 15 years, Mimi O'Donnell, and their three children.
Hoffman was interested in acting from an early age, mesmerized at 12 by a local production of Arthur Miller's All My Sons. He studied theatre as a teenager with the New York State Summer School of the Arts and the Circle in the Square Theatre. He then majored in drama at New York University.
In his Oscar acceptance speech for Capote, he thanked his mother for raising him and and his three siblings alone, and for taking him to his first play. Hoffman's parents divorced when he was 9.
With a versatility and discipline more common among British performers than Americans, he could seemingly take on any role, large or small, loathsome or sympathetic.