The veteran Saintfield rider came off on the third and final lap at the 27th Milestone.
A statement issued by the organisers on Monday evening said: "It is with a heavy heart that the Isle of Man TT Races can confirm the loss of Davy Morgan following an incident on the final lap of the first Supersport Race of the 2022 Isle of Man TT Races.
"We extend our deepest sympathy to Davy’s partner Trudy, his family, loved ones, and friends.
"Davy was a stalwart of the TT paddock, with 2022 marking 20 years since he first competed in the Isle of Man TT Races. Today’s Supersport Race was his 80th TT race start.
"His distinctive pink helmet was a regular and recognisable sight within road racing, having competed in hundreds of races across the Manx Grand Prix, Classic TT, Southern 100, North West 200, Ulster Grand Prix, Macau Grand Prix, Oliver’s Mount, and Irish national races, with numerous podiums and race victories along the way.
"Aged 52, Davy had contemplated walking away from the sport in recent years, but the COVID-enforced break had shown him what a life without racing would be like.”
In an interview with the News Letter in 2020, Davy said the Covid lockdowns had caused him to put off retirement.
He said: “Being away from racing has given me the chance to reflect on what motorbike racing means to me, so I’ve no desire to retire from the sport for a while yet, and it’s been a big part of my life for 27 years now.
“I’ve had the opportunity to see what it would be like without motorbikes, and I’m glad I had that because if I’d decided that I was finished, I’d have been kicking myself!”
The TT statement concluded by saying the Ulster rider would be ‘sorely missed’.
Davy was a regular on the road racing scene for 30 years and won the 250 race at the Ulster Grand Prix in 2017.
He was making his 80th race start at the TT in Monday’s race.
His death is the third fatality at the TT this year after Welsh rider Mark Purslow was killed in a crash at Ballagarey during practice, while French Sidecar passenger Olivier Lavorel lost his life in an accident on Saturday at Ago’s Leap, which left driver Cesar Chanal in a critical condition.