Dean Martin's music career started to decline after his son Dino was killed tragically in a plane crash in March 1987. In 1988, he went on a much-awaited tour with Frank Sinatra and Sammy Davis Junior (the former Rat Pack members) but quit after only a few dates due to apathy and health problems. While in his young years he felt great singing in clubs, he was no lost in front of an audience. His last show in Vegas was in 1989 at the Bally's Hotel, where he reunited with Jerry Lewis for the latter's 72nd anniversary. The last time he appeared on TV was in 1990 for a special celebration of Sammy Davis Jr's 60th anniversary. In 1991 he unofficially retired from the entertainment business.

For the following years he kept a very private life and only made a brief public appearance for his 77th birthday, when he even managed to sing. It is said that he never fully recovered from his son's death. He was also diagnosed with emphysema and in 1993 also with lung cancer. Doctors advised him to have surgery on liver and kidneys if he wanted to survive, but he refused. It is rumored that he also had the Alzheimer's disease since 1991, but these rumors were never confirmed.

His second ex-wife Jeanne stood by him during his last years and encouraged him to face death without fear. He died in 1995, on Christmas day, from a respiratory failure. The Las Vegas lights were turned off to honor him. In 2005, the Industrial Road in Vegas was renamed the Dean Martin drive.

Dean Martin's songs are still popular today. His duet song with Martina McBride, Baby, It's Cold Outside, reached the 7th position in music charts in 2006. Forever Cool, a collection of duets played by Dean Martin and several other artists was released in 2007. Dean Martin has three stars on the Hollywood Boulevard for his music, movie and TV career. This year, he was awarded a post-mortem Grammy award for his lifetime achievements. His songs survived for many years to come and inspired other artists like Elvis Presley.