He was 79 and was suffering from old age related issues.
Prime Minister Narendra Modi and Union Minister Smriti Irani condoled his death.
"Dinyar Contractor was special because he spread lots of happiness. His versatile acting brought smiles on several faces. Be it theatre, television or films, he excelled across all mediums. Saddened by his demise. My thoughts are with his family and admirers," Modi tweeted.
Irani wrote: "He brought bursts of laughter with him wherever he went, he lit up the screen and our lives with his wit and charm. We will miss your presence Dinyar bhai. Rest in Peace Padma Shri Dinyar Contractor, theatre legend, actor par excellence."
Dinyar Contractor was an accomplished actor, comedian and was renowned for his work in Gujarati and English theatre, TV serials and films. He acted in several Gujarati, Hindi and English stage productions as well as Hindi movies.
Launching his acting career while at school, he began as a professional in 1966 in Mumbai.
Initially, he was seen on television programmes with the legendary Adi Marzban when Mumbai Doordarshan launched the DD-2 channel in Mumbai with "Aao Marvao Meri Saathe," a Gujarati programme.
He was awarded the Padma Shri in January 2019.
Popular for his roly poly looks, his ability to tweak both ears and other acting skills, some of the prominent films in which he acted in "Baazigar", "Khiladi" and "36 China Town".
( With inputs from IANS )