Kennedy, who played as a forward and left midfielder, began his professional career with the Gunners where he won the league and FA Cup double in the 1970/71 season - his winning goal at Tottenham sealing Arsenal the double.
He joined Liverpool in 1974, scoring 72 goals during a seven-and-a-half year spell at Anfield which saw him win 15 trophies.
Among them were five First Division titles and three European Cups, netting one of the goals in a famous 3-1 win at home to Saint-Etienne en route to Liverpool's first crown on the continent.
Tributes have come pouring in for Kennedy, who has 17 England caps to his name.
Former Reds teammate Phil Thompson saying: "More sad news with the passing of Ray, what a great player and such a wonderful teammate. RIP pal YNWA."
Meanwhile, ex-Liverpool striker John Aldridge said: "Yet another magnificent ex-LFC star has passed away folks.
"Ray Kennedy, what a player and lovely bloke who suffered so much with Parkinson's disease for most of his life. He will definitely never walk alone. RIP Ray Folded YNWA."
Lifelong Arsenal fan Piers Morgan said: "RIP Ray Kennedy.
"Arsenal double-winning star in 1971 and one of my first footballing heroes. Went on to play for Liverpool and England.
"Fought a long courageous battle with Parkinson's Disease. Very sad news."