The 32-year-old was taking part in practice for the event when the crash happened.
William was a member of the renowned Dunlop family and was a winner at the North West 200 and Ulster GP.
His father, Robert, died after an accident at the North West 200 in 2008 and his uncle, Joey, was killed as a result of a crash in Estonia in 2000.
William competed regularly in the Isle of Man TT but sat out this year's races after coming home during practice week to be with his pregnant partner Janine.
A statement released by the Loughshinny Club, the organisers of the Skerries 100, said that they 'deeply regretted that William Dunlop has passed away following injuries received in a tragic accident that occurred during practice which took place today, 7 July 2018'.
Adding: "The Loughshinny Motorcycle Supporters Club extends their heartfelt sympathy to William Dunlop's family and friends. Our thoughts and prayers are with them at this very sad time."