A spokesman for Alief Independent School District, where Banks was a student, confirmed that she passed away early Sunday morning.
"I understand she had a smile on her face till the very end," spokesman Craig Eichhorn told ABC News.
Hours later, the students at Alief Hastings High School, from which Banks had recently graduated and where she was a member of the color guard for four years, organized a candlelight vigil in the band practice lot.
Members of the color guard held their candles up in the air and swayed along to the song "Halo" by Beyonce.
They were the same folks who had organized a social media campaign more than a week ago to get Beyonce to meet Banks, using the teen's nickname Ebob and the hashtag #EbobMeetsBeyonce.
After Beyonce made the FaceTime call to Banks last Wednesday, friends and fans took to Twitter to celebrate and post pictures of the big moment.
In the clip, Banks tells Beyonce that she loves her, and the singer replies, "I love you."
Banks was diagnosed with a rare form of cancer last summer and started chemotherapy in September, according to her band director, Paul Brodt.
But Brodt told ABC News last week that Banks still made every effort to attend school as well as color guard practice and competitions. In fact, she showed up at a competition earlier this month before her health took a turn for the worse.
Afterward, Banks remained in the hospital and received her high school diploma at a special ceremony held at MD Anderson and attended by 100 people -- including her 23 color guard teammates, school faculty members, school administrators and hospital staffers.
It was at her special graduation that the campaign to meet Beyonce was launched.
"Our kids love her ... and would do anything for her," Brodt said last week. "She's inspired everybody -- me along with all of our kids."