39-year-old Dai Roberts was competing in the Jim Clark Rally, named after two-time Formula One champion Jim Clark, near Duns in the Scottish Borders.
Police Scotland have said that the driver of the Hyundai i20N Rally2 car, 27-year-old James Williams from Newcastle Emlyn, was taken to the Royal Infirmary of Edinburgh hospital after suffering serious but not life-threatening injuries.
Superintendent Vincent Fisher of Police Scotland said: “Our thoughts are with the family of the man who has died and inquiries are ongoing to establish the full circumstances.”
Race organisers have cancelled the remainder of the rally.
A spokesperson for James Williams Rallying said: “It is with a heavy heart, we have to share this sad news.
“The motorsport community is deeply saddened to learn of the passing of our beloved Dai Roberts.
“Our thoughts and prayers are with the Roberts family at this difficult time.”
Governing body, Motorsport UK said that it “sends its condolences to Dai’s family and friends, the Jim Clark Rally, Jim Clark Memorial Motor Club and members of the motorsport community.
It added that it has “initiated a full investigation into the circumstances of the incident and will work closely with the Jim Clark Rally event organisers and Jim Clark Memorial Motor Club and will co-operate with the relevant authorities.”
This is the second time tragedy has struck this motorsport family, as Dai’s brother Gareth died competing in a rally in Sicily in June 2012.
Dai himself had a near escape in 2014 after surviving a horrific rallying accident at the Ulster Rally in Northern Ireland, which saw his driver, Timothy Cathcart killed.
Tributes from motorsport colleagues have poured in for the popular co-driver.
Posting on social media, Sambo Collis said: “Can’t believe I’m typing this. The first time I met Dai was on the classic tracks some 20 years ago, he made us feel very welcome competing in South Wales, from then on I was happy to class him as a mate.
“A wicked sense of humour, a fantastic co driver and a lunatic behind the wheel! What rallying has put the poor Roberts family through certainly makes you question things.”
Nick Young added: “Rest in peace Dai, you’re finally reunited with Gareth Roberts, Craig Breen, and Timmy, my thoughts are with your family and friends sir.
“It was a pleasure to know you. James Williams Rallying I wish you a speedy recovery.”
Rally driver, Andy Davies said he was “still struggling to process and acknowledge the reality of this. The world can be so damn cruel.
“Never more than a phone call away, Dai stepped up when I needed it most. He always had the answers. Someone I always had the utmost respect for, and someone I was lucky to call a friend.
“A life lived, a mark left on the world for so many. We all have a story about Dai.
“I’ll look back on the memories, and miss you so very much.”