The Rev. Robert Nugent died Wednesday in Milwaukee. He was 76 and had been suffering from lung cancer.
The priest and Sister Jeannine Gramick were the founders of New Ways Ministry in 1977.
They said their goal was to reconcile gays and lesbians with the wider church community.
But in 1999, Cardinal Joseph Ratzinger, who was the Vatican's orthodoxy watchdog, said Nugent and Gramick had harmed the church by causing confusion about church teaching that same-sex relationships were sinful.
Ratzinger, who went on to become Pope Benedict XVI, ordered the co-founders to stop their outreach.
New Ways Ministry continues to operate. The Maryland-based organization announced Nugent's death on Thursday.