Mark James was flown to Liverpool’s Aintree Hospital after suffering head injuries in the crash during the Pokerstars Rally on 11 November.
His friend Ian Taylor said he was a “larger than life character who would help anyone at the drop of a hat”.
Rally organisers Manx Auto Sport Club were yet to comment.
Mr James’ co-driver Hefin Jenkins was not injured in the crash, which happened near Andreas church.
Posting on the Ammanford Motor Club’s facebook page, Mr Taylor said: “It is with with a heavy heart and great sadness that we inform you of the passing of club member and friend Mark ‘Jamesy’ James.
“It is always a shock to lose someone from the rallying community, but even more so one of our own members.”
Rally expert Chris Boyd said it was the Nantgaredig man’s second year competing in the Isle of Man event, but he had been competing in Wales since the 1980s.
This year’s rally was won by Jamie Jukes and James Morgan, who dedicated their triumph to the Welsh driver.
Manx Auto Sport Club also run the Manx National Rally in May, with both events attracting crews from across the British Isles.