Bhandari, who was suffering from pancreatic cancer, breathed his last at Medanta Hospital in Gurgaon last night, family members said.
The mortal remains of the diplomat, who is survived by his wife and daughter, were consigned to flames at the Lodhi Road crematorium here this evening.
Family members, friends, admirers and leaders across the political spectrum bade him a tearful adieu.
Vice-President Hamid Ansari, Delhi Chief Minister Sheila Dikshit, former Cabinet minister Natwar Singh, Rajya Sabha MP Balbir Punj, former SP leader Amar Singh and other public figures attended the cremation.
Bhandari, who had served as the Lt Governor of Delhi apart from serving as the Governor of Tripura and Goa, was admitted to the Medanta Hospital three weeks ago.
"Bhandari was admitted on August 31. He had been ailing for some time. He was admitted in the ICU and died at 9:50 PM last night due to multi-organ failure," a hospital spokesperson said.
Bhandari was the UP Governor in July 1996 when the state was under President's rule. He was the Foreign Secretary between 1985-86.
Born on March 29, 1928 in Lahore, he had joined the Indian Foreign Service (IFS) in 1950 as the Vice-Consul at the consulate in New York.
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