Ray Chapman, of the Cleveland Indians, was the first and only player in the history of Major League Baseball ever to die as a direct result of being hit by a pitch. He wasn't the first player ever to die from playing ball; that dubious distinction belongs to one Doc Powers, who crashed into a wall trying to catch a pop-up on April 12, 1909, finished the game, and died two weeks later after three surgeries. Chapman was just the only one to have died from being beaned.
Although the helmet had been introduced to the Major Leagues in 1905, it wasn't actually required until 1971. So when Chapman came to the plate on August 16, 1920, he did so with only a cloth cap on his head. Chapman had something of a cavalier playing style, so he was also crowding the plate that day. In fact, it was said later that his head was actually so close to the plate that it was brushing the strike zone, which in those days extended up to about the letters of the players' uniforms.
The opposing pitcher, Carl Mays of the New York Yankees, was one of the old "submariners," meaning that he threw the ball to the plate underhanded but with quite a bit of force. His pitches also tended to rise quite a bit on the way to the plate, and this one was no exception. It started out fairly low--about the level of the batter's knees--and by the time the pitch got to home plate it had risen just over the top of the strike zone. Unfortunately for Chapman, this happened to coincide with the top of his skull. Even though Chapman was an experienced player (having been in the majors for eight years) who had undoubtedly been hit by or had to dodge out of the way of pitches in the past, this time he froze. He was taken to the hospital, where he died the next day. It was later discovered that his skull had actually been cracked by the force of the pitch.
Chapman really couldn't have picked a worse time to die, though. He was having an excellent season, batting .303 with 97 runs. Chapman was also a very popular player, and he held a record for stolen bases (52, set in 1917) that would stand for 63 years. Even though his teammates were very much saddened by his passing, they wore their black armbands that season to the World Series, where they won in spectacular fashion*.
Most educated commentators seem to agree that Chapman would have been bound for the Hall of Fame had he not had his career so harshly foreshortened. This was a unique event in the history of baseball. In modern terms, it's roughly analagous to, say, the hypothetical future onfield passing of Ken Griffey Jr.** or Sammy Sosa*** and was certainly thus jarring for anyone then at all associated with baseball.
*During the same game, not only did Elmer Smith hit the first ever grand slam in a World Series game, but Bill Wambsganss turned the first and only unassisted triple play in a World Series game.
**Not that I mean any harm whatsoever to Mr. Griffey, whose biceps dwarf my head.
***Or Mr. Sosa, whose biceps dwarf my apartment building.
Sources: http://baseball-almanac.com/firsts/first3.shtml,
http://www.pubdim.net/baseballlibrary/ballplayers/C/Chapman_Ray.stm,
http://www.pubdim.net/baseballlibrary/ballplayers/M/Mays_Carl.stm