Chad died Wednesday at his ranch in Palm Desert, CA as a result of organ failure ... according to his longtime attorney, Arthur Barens.

We're told he had an injury a few years ago which led to progressive organ failure and ultimately killed him.

Chad was with his children, his life partner and his attorney when he died.

Steve McQueen's only son, Chad is best remembered as Dutch in the 1984 hit "The Karate Kid" ... reprising the role in the 1986 sequel "The Karate Kid II."

Chad is also known for his starring role in the 1993 flick "Firepower."

Despite rumors, Chad did not reprise his 'Karate Kid' role for the final season of "Cobra Kai," his lawyer tells TMZ.

Outside of Hollywood, Chad was a professional racer ... competing in different types of racing, including the Baja 1000 and Motocross. He won the World Mini Grand Prix when he was just 12 years old.

When Steve was filming the 1971 racing film "Le Mans," Chad would famously sit on his father's lap behind the wheel of a Porsche 917 ... reaching 100 MPH!!!

Chad was just 10 years old at the time, and he also raced in a children's only go-kart track that was set up on the "Le Mans" movie set.

His attorney is remembering him as "a one of a kind guy and will be missed."

Chad was 63.