He lost control of his bike, slid across the track and was hit by Rossi and American rider Colin Edwards - who broke his collarbone in the accident.
Simoncelli's helmet came off in the accident, and the Gresini Honda rider was taken to the medical centre for treatment, but was declared dead 45 minutes later.
Honda team-mate, and 2011 world champion Casey Stoner, said: "I'm so shocked and saddened by the loss of Marco.
"When things like this happen it reminds you how precious life is, it makes me feel sick inside."
Simoncelli's compatriot Andrea Dovizioso said: "He seemed invincible. What happened seems impossible."
Dovizioso and Simoncelli had ridden together in 125cc and 250cc as well as at MotoGP level.
And Dovizioso added: "We raced together since we were kids. I saw him always pushing to the maximum.
"He crashed many times but without major injuries. In these circumstances, words don't seem to be appropriate.
"I think of Marco's family and all the people dear to him, in particular his father and mother. I also have a child and what happened today is the hardest situation you can imagine.
"I watched the images and I'm shocked. In a race you fight and push hard and disaster is often around the corner. Marco was a strong rider and he always pushed hard."
Born Cattolica, Italy
Wins the European 125cc title
Wins his first 250cc race at the Italian GP
: Wins the 250cc World Championship
Finishes third in the 250cc World Championship
Moves up to MotoGP class riding for Honda
Claims first MotoGP pole at Catalunya GP
First podium finish at Czech Republic GP
Second place at Australian GP
sealed the MotoGP title
during the previous round in Australia, said: "All I can say is how sorry I am for Marco's whole family.
"I can't imagine what they are all going through and our thoughts and wishes are with them at this time. I hope they all stay close and pull through this tragedy together."
Fellow Honda racer Dani Pedrosa had a run-in with Simoncelli earlier this season after the Italian broke the Spaniard's collarbone in a
manoeuvre deemed dangerous
. He said: "Many times we ourselves forget how dangerous this sport can be and, when you lose people on the way, nothing has any meaning.
"It's clear we all do what we like, what we love, but on days like today nothing matters."
Honda worldwide executive vice-president Shuhei Nakamoto said: "Marco was a very nice guy and a very talented rider.
"Sometimes I was a little harsh with him, for example after his
first MotoGP podium in Brno
when I told him, 'Lucky podium'. He was so angry but I wanted to motivate him as I knew he was able to do even more.
"I was thinking that, when he won his first race, we would have been able to celebrate together.
"Now I just want to say thank you to Marco for what he gave me and to pass my sincere condolences to his family at this very sad time."
Simoncelli's manager Carlo Pernat said: "Marco was a cheery boy, everyone's friend. He had expectations, dreams. He was a boy from days gone by, with a wonderful family who taught him good values. It's terrible, there are no words, everyone's very upset, he could have become world champion one day.
"He had this desire to get to the top, it was really inside him, there was this desire for success because he knew he could have it."
Formula 1 driver Jenson Button
said on Twitter:
"RIP Marco … Such an exciting talent lost. My thoughts are with his family, friends and everyone involved in MotoGP. Motorsport can be so cruel..."
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