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Gen. Manuel Contreras, who headed the feared spy agency that kidnapped, tortured and killed thousands during Chile's military dictatorship, died late Friday at a military hospital while serving a combined sentence of more than 500 years for crimes against humanity. He was 86.

Contreras had been hospitalized since September because of kidney problems and was later moved to the intensive care unit when his condition degenerated.

Soon after the death was confirmed by the national prison service, a crowd of several dozen people gathered outside the Santiago hospital waving Chilean flags. They broke into changes of "Murderer!" and toasted with champagne in paper cups to celebrate his death.

After the 1973 military coup led by Gen. Augusto Pinochet that ousted the socialist government of President Salvador Allende, Contreras formed and commanded the DINA spy agency and went on to become the second most powerful and feared figure of the regime after Pinochet himself.

Born on May 4, 1929, in Santiago, Contreras was a career military man who also helped organize Operation Condor, a coordinated effort formed in the mid-1970s by South America's dictatorships to eliminate dissidents who sought refuge in neighboring countries.

Contreras was among Pinochet's closest confidants early on, but the pair exchanged accusations in their final years. While Contreras alleged his former boss amassed a fortune trafficking drugs to Europe, Pinochet accused the spy chief of acting without his consent and committing the era's worst abuses.

According to an official report, 40,018 people were imprisoned, tortured or slain during the 1973-90 dictatorship. Chile's government estimates that of those, 3,095 were killed, including about 1,200 who were forcibly "disappeared."

Contreras supervised the apprehension of thousands of suspected leftists after the coup as Santiago's national soccer stadium was transformed into a detention center where hundreds were held and tortured. About 150 bodies, many of them weighed down by sections of railroad track, were thrown from helicopters into the ocean and lakes, the military has acknowledged.

Most of the disappearances occurred during the dictatorship's early years, when Contreras was head of intelligence. His prominence in Pinochet's government waned after the U.S. sought to extradite him for involvement in the 1976 bomb assassination in Washington of Orlando Letelier, who had been defense and foreign relations minister under Allende.

Chile's Supreme Court blocked the extradition, but Pinochet removed Contreras from his post under U.S. pressure and dismantled and replaced DINA. After Chile returned to democracy in 1990, Contreras was indicted in the Letelier case and eventually served seven years for the assassination. He always denied responsibility and blamed the CIA for the bombing.

He was also convicted in the 1974 bomb killing of Gen. Carlos Prats, Pinochet's predecessor as army commander, in Buenos Aires, Argentina, but hundreds of other cases were still pending against him.

Contreras once threatened to open a trunkful of documents that he said would incriminate military officials from Pinochet down, but never made good on that promise. Other unproven claims included his assertion that 12,000 foreign rebels were in Chile when the coup occurred and that numerous missing political prisoners were in fact still alive, living under new identities.

In later years, he alleged that Pinochet used an army chemical plant to produce cocaine that was sold abroad and he said drugs and arms trafficking were the main source of the $27 million that the dictator held in secret bank accounts abroad. Pinochet denied the charges and called Contreras a liar.

Because of his poor health and mild dementia, Pinochet avoided trial for dictatorship era abuses by being declared unfit. He died in 2006.

There was no escape for Contreras, who police had to shield from hundreds of angry demonstrators pelting him with eggs, fruit and plastic bottles in 2004 as he was taken away to serve a 12-year sentence for the killing and disappearance of leftist Miguel Angel Sandoval.

Starting in 2005, Contreras served time in Cordillera, a luxury prison for dictatorship-era officials convicted of crimes against humanity. The government for years was under pressure to shut the prison, which had tennis courts, barbecues and a swimming pool for its prisoners.

The prison finally was closed under President Sebastian Pinera's government in 2013, after Contreras gave an interview inside Cordillera ahead of the 40th anniversary of the military coup. Contreras mocked prison guards, saying they were only there "to hold his cane," and claimed that all of the thousands of disappeared during the dictatorship were armed leftists killed in gunfights.

Contreras was transferred to a special lockup for human rights offenders where he remained until his health worsened and he was taken to the military hospital.

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Associated Press writer Eva Vergara and former AP staffer Katie Burford contributed to this report.

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Luis Andres Henao on Twitter: https://twitter.com/LuisAndresHenao