Sandeep, afflicted with the disease for the past few days, was crowned the winner of singing reality show 'India Idol Season 2' on April 22, 2006.
The singer was shifted to Gurgaon in Haryana after his condition deteriorated, family members said adding he breathed his last in the afternoon.
The playback singer, who is survived by his wife and a month-old daughter, had won the award for best new Bollywood talent in New Jersey, USA.
He had also bagged the Sur Aradhna award for best upcoming male singer category.
The judges and host of the second season of the 'Indian Idol' expressed grief over the sudden demise of the singer.
Sonu Nigam, who was one of the judges on 'Indian Idol 2', posted on Twitter: "Sandeep Acharya died? Oh my God.. I'm so so sad. What a beautiful soul. The boy was just 29... God give his parents some strength."
Co-judge Farah Khan wrote: "It's too sad to hear of Sandeep Acharya, winner of 'Indian Idol 2' and my favourite. passing away. Such a gentle boy he was. Not his time to go."
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