Fox 5 news said he had been found unconscious in his home. Investigator Betty Honey of the Fulton County Medical Examiner's office said Kelly, 34, was pronounced dead around 5pm local time at the Atlanta Medical Center.
Ms Honey said authorities are unsure of Kelly's cause of death and that an autopsy has yet to be performed.
But Cpl. Kay Lester of the Fulton County police said "it appears it may have been a possible drug overdose."
Kelly, known as "Mac Daddy" performed alongside Chris Smith, known as "Daddy Mac," in the early and mid-90s.
The rappers were discovered by producer Jermaine Dupri while they were singing in an Atlanta mall.