Aliyev, 52, used strips of gauze bandages to hang himself from a coat hook in the bathroom of his Josefstadt jail cell, which he occupied alone, said Peter Prechtl, head of prison administration.
The businessman and former diplomat had been in custody in Vienna since June after turning himself in to face charges he killed two bank managers from Kazakhstan who disappeared in 2007 and whose bodies were found four years later.
Aliyev has denied the accusations and was due to go on trial in April.
A Kazakh court had already convicted him of murder in the case and sentenced him to 40 years in prison.
However Aliyev sought refuge in Austria, which refused to extradite him back to Kazakhstan saying he would not get a fair trial.
Before falling from grace in 2007, the former Kazakh ambassador to Austria was married to Dariga, the eldest daughter of President Nursultan Nazarbayev, who holds an iron grip on the ex-Soviet republic.
Aliyev's death came as he was to testify on Tuesday in the trial of two inmates he alleged had demanded payment or they would kill him and make it look like a suicide.
"There is a presumption that someone killed him," said Stefan Prochaska, one of Aliyev's lawyers.
Another Aliyev lawyer, Klaus Ainedter, said he has "considerable doubts" his client committed suicide and demanded a full investigation.
Prechtl told the Austrian Press Agency that Aliyev had requested a single cell in the prison's hospital unit. He was not considered a suicide risk and was graded "green" in the corrections department system, which meant he could be left unattended.
Aliyev blamed his fall from grace on his presidential ambitions which led to him becoming a fierce opponent of Nazarbayev.
However the Kazakh opposition never accepted Aliyev into their fold, alleging he had participated in government political repression since the 1990s.
Nazarbayev has been at the head of Kazakhstan since its independence in 1991 and since 2010 has held the title "leader of the nation" which gives him lifetime decision-making powers over the country's major policies.