Houston died in a bathtub from an 'accidental' drug overdose almost exactly three years ago, in tragically similar circumstances.
Authorities found a dozen prescription drug bottles in her Beverly Hills Hotel suite and listed heart disease and cocaine use as contributors, but concluded that she accidentally drowned.
A doctor told the family that nothing more could be done for her, People magazine reported.
"Everyone is coming to the hospital to say goodbye," a family member told the magazine.
"Bobby has been crying nonstop since yesterday," the source added. "We are grieving."
The devastating news comes as a friend of Bobbi Kristina's claimed he was the one who called 911 after finding her in the bathtub on Saturday - not her 'husband' Nick Gordon.
Max Lomas, who has previously been arrested on drug distribution charges, claims Gordon was 'elsewhere in the residence' and it was he who removed her from the tub.
Lomas' lawyer told Access Hollywood on Wednesday that it was his client 'who began the process of hopefully helping her recover.'
"Max was actually the one that found her and he's the one that removed her from bathtub and called 9-1-1, and Max is the one who began the process of hopefully helping her recover," said Phillip Holloway.
According to Holloway, the experience was traumatic for his client.
"He was terrorized. It was absolute pure panic, and he was frightened for his friend, his close friend who was not breathing and did not appear to show any signs of life. He's petrified," Holloway said. "And he wanted to get her the help that she so desperately needed at the time."
According to Holloway, Gordon arrived in the bathroom he started CPR on Bobbi Kristina as Lomas did not know how to conduct life-saving measures.
"Max assisted in the best of his ability - he's not trained in CPR - but he's the one who removed her from the bathtub and called 9-1-1," Holloway said.
While the Roswell Police Department is no longer commenting on the incident, Holloway said Lomas is considered a witness, not a suspect, and is cooperating with authorities regarding the case.
"He's absolutely not in hiding, no," Holloway told Access. "In fact, we're doing all we can to cooperate to find out exactly what happened to Bobbi Kristina, and under what circumstances. That's everybody's goal, including Max."
Lomas was arrested on January 15 and charged with weapons offenses, marijuana possession and possession of an anxiety drug. Holloway says Lomas pleaded not guilty and the arrest is unrelated to the discovery of Brown in the tub.
It has also emerged that police are looking into the possibility that eye-witnesses may have fled the scene after Bobbi Kristina was found.
Roswell Police Detectives are investigating whether people fled before officers arrived and have been asking local businesses if they saw anything suspicious that morning, E! News reported.
Nearby bank employees told detectives they saw nothing but police have requested surveillance footage, sources told the website.
Questions still remain over what part drugs - if any - played in Saturday's incident; police reportedly found narcotics in the home during a second search last weekend.
Bobby Brown has had his own share of drug troubles, including how he admitted to using "an awful lot" of cocaine after marrying Whitney Houston in 1992.
"I think I was bored," he previously told VH1's Behind the Music. "I had just gotten married and things weren't right. Unfortunately, I turned to alcohol and drugs."
He was also previously arrested for drug possession, including in 2002 when he was found carrying marijuana while speeding - just months after he was taken to hospital by his concerned wife and friends.
In 2000, he also spent 26 days in a Florida jail for violating probation on a 1996 drunken-driving charge by not submitting to a drug test.
Other, more recent troubles have included a 2012 arrest for DUI and a stint in rehab in August of that year for alcohol addiction - before being arrested for another DUI just three months later.
In 2013, he served just nine hours behind bars after pleading no contest to suspicion of driving under the influence of alcohol.
On Tuesday, he spoke out through his lawyer to correct reports that his daughter had married Gordon.
Following Houston's death three years ago, Bobbi entered into a relationship with Gordon - a sort-of step-brother after her mother welcomed him into their home when he was 12.
Then last January the couple announced that they had got married, and Bobbi Kristina posted photos of their 'wedding rings' on social media.
But on Tuesday a lawyer representing Bobbi's father released the following statement: "We are currently investigating the events that led to the hospitalization of Bobbi Kristina."
"To correct earlier reports, Bobbi Kristina is not and has never been married to Nick Gordon," added Christopher Brown of Brown & Rosen LLC.
Relations between Gordon and other family members have been rocky and he remains subject to a protective order barring him from being within 200 feet of Bobbi Kristina's aunt, Patricia Houston.
Bobby has five children; LaPrincia, 24, is his daughter with Kim Ward, from who he split in 1991. Bobbi Kristina is his only child with Whitney Houston, whom he divorced in 2007.