Ms Lakwena promised her followers immunity from army bullets
The woman who began the long running insurgency in northern Uganda, Alice Lakwena, has died in exile in Kenya after a long illness.
The self-proclaimed prophetess founded the Holy Spirit Movement in the 1980s.
Her followers believed magic potions protected them in battle, but they were defeated by government forces.
Many later regrouped to form the Lord's Resistance Army (LRA), led by her cousin Joseph Kony. The LRA is holding talks to end its 20-year conflict.
Mrs Lakwena, who was in her fifties, continued to inspire devotion among her followers, who believed she could cure various diseases.
More than 1.5m people have fled their homes due to the conflict and thousands of children have been abducted by the LRA.
A Kenyan police commander said the cause of Ms Lakwena's death was not known, but she had been ill for some time, AFP news agency reports.
Ms Lakwena founded her movement in 1986 after the overthrow of the northerner Milton Obote by President Yoweri Museveni.
The spirit-medium said she was fighting to purify the aggrieved northern Acholi people.
She promised her fighters that use of her "Holy Oil" would protect them from bullets, turning them to water.
Her 7,000 hymn-singing fighters reached to within 130km of the capital, Kampala, before they were defeated by the government army in 1988.
After she fled, Ms Lakwena lived in a refugee camp in north-eastern Kenya.
Following the Holy Spirit Movement's demise, Mr Kony went on to found his own rebel group which over the next two decades went on to abduct thousands of children to become fighters or sex slaves.
It has not been clear what Mr Kony, who also sees himself as a spirit medium, has been fighting for but he has said he wanted to rule according to the Biblical Ten Commandants, and create a "new generation" of Acholis.
Progress at peace talks, being held in southern Sudan to end the northern rebellion, has been slow.
Mr Kony says his group will not disarm until the International Criminal Court in The Hague drops war crimes charges against him and other LRA leaders.