The group LulzSec, which has previously targeted companies including Sony, claimed it carried out the hijack, via messages on Twitter.
Internet users trying to access thesun.co.uk were redirected to new-times.co.uk and a story entitled "Media mogul's body discovered".
It suggested that Mr Murdoch had been found after he had "ingested a large quantity of palladium".
After that site stopped working, The Sun address was re-directing to LulzSec's Twitter account, which claimed to be displaying "hacked internal Sun staff data" in one entry.
A News International spokeswoman confirmed the company was "aware" of what was happening, but made no further comment.
LulzSec is a group of hackers that has claimed responsibility for various high-profile computer attacks on bodies including FBI partner organisations, the CIA, the US Senate and a pornography website.
In the UK it also carried out a distributed denial of service attack - where large numbers of computers overload a target with web requests - on the Serious and Organised Crime Agency website.
The group's name comes from the word lulz, which is online slang for laughter at someone else's expense. Their logo is a cartoon man in a top hat and monocle, holding a glass of wine.
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