Pillai, who had directed just four movies, including pathbreaking new generation film "Traffic", had been undergoing treatment at PVS Memorial hospital here for non-alcoholic liver cirrhosis.
Several actors who worked in his movies rushed to the hospital on hearing news about his demise at 11.45 am.
The filmmaker had contracted pneumonia during the post production of his latest film "Vettah" and it worsened his health condition.
His death comes a day after "Vettah", starring Manju Warrier and Kunjacko Bobban, hit theatres. The film was completed while he was undergoing treatment.
Bollywood actor Manoj Bajpayee, who starred in the yet-to-be released Hindi remake of "Traffic", condoled Pillai's death on Twitter.
"So, sad to hear an untimely demise of Rajesh Pillai dir of #traffic.May he rest in peace."
His co-star of the film Divya Dutta wrote, "Lost a very dear director Rajesh Pillai...
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