Family sources said the 75-year-old actress, who was the niece of legendary filmmaker V Shantaram, died this morning at her Andheri residence here.
"It is shocking as she did not have any history of illness," a relative of hers told PTI.
The actress, who excelled equally in playing a coy Indian beauty as well as roles with modern sensibilities, paired up with many stars onscreen including Ashok Kumar, Kishore Kumar, Dev Anand, Rajesh Khanna and Shashi Kapoor.
Nanda was born in 1939 to Marathi actor-director Vinayak Damodar Karnataki. But the family faced hardships after the death of Nanda's father in her childhood. Like many others of her era, Nanda started helping her family by becoming a child star. She made her debut with film Jaggu in the 1950s.
It was Shantaram, her maternal uncle, who helped launch Nanda's career in Bollywood by casting her as a 17-year-old in 1956 hit Toofan Aur Diya.
The film became a success and there was no looking back for the actress. Nanda went on to rule the screen space from 1960 till 1973 with Nutan, Waheeda Rehman and Sadhna. Rehman became a lifelong friend of the introvert actress.
Some of her most memorable roles are in Jab Jab Phool Khile, Gumnaam and Hum Dono.
In Jab Jab Phool Khile, Nanda played her career's first westernised role and paired up with Shashi Kapoor with whom she went on to do eight films.
The Kashmir-set romance, however, remains their most famous pairing and influenced other Bollywood love-stories later.
She worked with Rajesh Khanna in The Train when he was just starting out as an actor. Her other memorable roles include Mandir, Angarey, Ram Laxman, Bandi, Ittefaq, Prayashchit, Ahista Ahista, Prem Rog and Mazdoor.
In the beginning, Nanda mostly excelled as a supporting star but eventually she found great acceptance and popularity as a lead heroine.
The title of 'Choti Bahen' stuck with her in real life too.
Nanda kept her private life away from her work. She was engaged to filmmaker Manmohan Desai in 1992 but she remained unmarried after his death in a freak accident.
Desai fell off the terrace of his rented apartment in Girgaon in 1994 after the railing on which he was leaning collapsed.
Nanda was nominated for Filmfare Award five times for her performance in Bhabhi (1957), Aanchal (1960), Ittefaq (1969), Ahista Ahista (1981) and Prem Rog (1982).
She won Filmfare Best Supporting Actress Award for Aanchal. After a small role in Manoj Kumar's 1972 film Shor, Nanda reduced her work in films. Her other films such as Chhalia and Naya Nasha did not click.
Nanda made a brief return to acting in 1982 as a character actress where she played the onscreen mother of Padmini Kolhapure in Ahista Ahista, Mazdoor and Prem Rog. After that she retired from acting.