Relegated Villarreal announced they had reached an agreement for Preciado to take charge of the club next season as they sought an immediate return to the La Liga.
Preciado, who had parted company with former club Sporting Gijon in January, had been set to be presented as the Yellow Submarine's new manager, but news broke this morning that the Cantabrian had died of heart attack overnight in Valencia.
Villarreal president Fernando Roig said: "He was a great person for football. We are going to support his family and try to help them at this difficult time."
Tributes have been pouring in from the Spanish footballing community for the popular Preciado - known as Manolo - with Mourinho writing an open letter on the Real Madrid website.
One of Preciado's high points during his six years in charge of Sporting came against Madrid when, in April 2011, his side won 1-0 at the Bernabeu. That was the first home league defeat Mourinho had suffered in more than nine years whilst in charge of Porto, Chelsea, Inter Milan and Madrid.
Earlier that season Preciado had a well-publicised war of words with Mourinho after the Portuguese had accused Sporting of gifting Barcelona three points by fielding a weakened team in a league match.
Tensions between the two eased though, and earlier this year Preciado said during a visit to Madrid's Valdebebas training ground that he had a "magnificent relationship" with Mourinho.
In his letter, Mourinho said: "Manolo was always an honourable opponent, who I got to know well when he came to visit us in March,
"He had everything that I like in a person and in sportsmen: character, openness and the courage to fight against blows.
"We have been left by a football figure and above all by a very special person. My memory of him will be heartfelt and permanent."
Mourinho also said he felt sure Preciado would have led Villarreal out of the second division.
Preciado took over Sporting in the summer of 2006 and in his second season led the Asturian club into the La Liga for the first time in 10 years.
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His record of 232 official matches in charge at El Molinon is second only to Jose Manuel Diaz Novoa, who sat in the Sporting hotseat for 282 games.
Sporting, who were relegated in the recently-completed season along with Villarreal, said on their website: "With deepest regret, Sporting Gijon wish to express their sorrow at this sad loss, for someone who formed an integral part of this club's history, and send their deepest condolences to his family in this time of grief.''
Prior to his time at Sporting, Preciado was coach of the likes of Racing Santander, Levante and Murcia, while as a player he represented Racing, Real Mallorca and Alaves among others.
Champions Madrid also offered their condolences following Preciado's death, as did Barcelona and a host of other clubs, coaches, players and official bodies in Spain.
Asturian David Villa, who came up through the ranks at Sporting before leaving in 2003, said on Twitter: "I have no words to express how I feel. A great friend and an incredible person has gone. Hugs for his family. Rest in peace Manolo Preciado."
National team coach Vicente Del Bosque, whose side are preparing for their Euro 2012 opener against Italy on Sunday, told Radio Marca: "We're shocked. We were having breakfast and it made a deep impression on us.
"He was a football man who represented the values of this sport. He was a fighter who made his mark in this world."
Numerous Spain players also used their Twitter accounts to express their shock and sadness at the death of Preciado, including Sergio Ramos and Cesc Fabregas.
Madrid defender Ramos tweeted: "Football is mourning. I got up and the first thing I heard is the news about Manolo Preciado. Life is unfair and a great person has gone."
Barca midfielder Fabregas added: "I can't believe the bad news i just woke up with. Hugs for the family of Manolo Preciado. RIP my friend."
Villarreal were looking for a new coach after Miguel Angel Lotina, who took charge in March following the dismissal of Jose Molina, failed to save the club from a shock relegation.
The Yellow Submarine finished fourth in the 2010/11 La Liga season and reached the Champions League semi-finals in 2006, and the Europa League semi-finals in 2011.