Khanna died of advanced bladder cancer on Thursday morning, said Tushar Pania, from the HN Reliance Foundation and Research Centre in Mumbai.
Dubbed Bollywood's "original heartthrob," Khanna had reportedly been battling cancer for several years.
Last month, he was hospitalized in Mumbai due to severe dehydration and bladder cancer, according to a report in the Hindustan Times.
A photograph of him in a hospital gown looking very frail went viral on social media.
Tributes to the actor poured in on social media, with Indian Prime Minister Narendra Modi also paying his respects.
In a career spanning over four decades, Khanna acted in over a 100 films.
He's best remembered for his performances in movies such as "Mera Gaon, Mera Desh," ("My Village, My Country"), "Gaddaar," ("Traitor"), "Kuchhe Dhaage," ("Fragile Threads"), "Amar, Akbar, Anthony," which he co-starred in with fellow superstar Amitabh Bachchan, and "Qurbani," ("Sacrifice") -- one of several films for which he received a Filmfare Award nomination, India's equivalent to an Oscar.
From villain to hero
Khanna was born on October 6, 1946 in Peshawar, British India, now Pakistan. Soon after the partition of India and Pakistan that year, his family moved to Mumbai.
He made his acting debut in 1968 in "Man Ka Meet," ("A Pairing of Hearts"), where he played the villain, a trend that continued for much of the start of his career.
Three years later, he made the successful transition to the "hero" and played the lead role in "Hum, Tum or Woh," ("Me, You and Them").
In 1982 he left the industry for five years and became a follower of the spiritual leader Osho, a guru with a following in both India and abroad who combined different religious and philosophical teachings.
He returned in 1987 with a slew of romantic films.
In 1999, he received the Filmfare Lifetime Achievement Award and less than a decade later, in 2007, he won the ZEE Cine Lifetime Achievement Award.
Khanna was also a well-known politician. In 1997 he joined the current ruling Bharatiya Janata Party (BJP).
The following year, he was elected to India's lower house of parliament. He was elected four times from his constituency in the northern state of Punjab.
Despite his move into politics, Khanna continued to act with his latest film being 2015's "Dilwale," ("The Big Hearted").
Khanna is survived by his second wife Kavita, his children Rahul, Akshaye, Sakshi and Shraddha.
Rahul and Akshaye are both also actors; his son Rahul Khanna is best known to international audiences for playing Yousaf Rana in the spy thriller television series, "The Americans."