"The athlete received treatment at the scene and was in the process of being taken to the athlete hospital when he suffered a cardiac arrest," the IPC said in a statement.
"The ambulance then diverted to the nearby Unimed Rio Hospital in Barra where he passed away soon after arrival."
International Paralympic Committee president Sir Philip Craven issued a press release to express his condolences to Golbarnezhad's family and friends.
"This is truly heartbreaking news and the thoughts and condolences of the whole Paralympic movement are with Bahman's family, friends, and teammates as well as the whole of the National Paralympic Committee of Iran," the statement read.
"The Paralympic family is united in grief at this horrendous tragedy which casts a shadow over what have been great Paralympic Games here in Rio."
Iran has lowered its flag to half mast in the Athletes' Village and there will be a minute's silence during the Games' closing ceremony.
Brian Cookson, president of cycling's governing body the Union Cycliste Internationale (UCI), was one of many to relay their sorrow over the tragic incident.
"I am devastated to hear about the death of Iranian rider Bahman Golbarnezhad. Our thoughts are with his family and friends, and the NPC of Iran to whom we offer our most sincere condolences," Cookson said.
"This is very sad news for sport and for the Paralympic movement. Our hearts and prayers are with Bahman's family, his teammates and all the people of Iran," added Carlos Nuzman, the president of the Rio 2016 Organising Committee.
The C4-5 road race was Golbarnezhad's second event of the Games, having already finished 14th in the C4 time trial earlier in the week.
It was his second time at the Paralympics after competing in London four years ago. The Iranian Paralympic Committee praised the cyclist for being a role model the whole of Iran could look up to.
"He was an exemplary Paralympic sportsman who, with love and energy, tried his best to promote the name of Iran and to make all of us proud and at the end he gave his life for this," they said.
"All members of the Iranian cultural and sports camp here express condolences to his family and the Iranian nation. The name of Bahman Golbarnezhad will be inscribed in the proud history of Iranian Paralympics."
