Shah died of a heart attack, sources close to the family told PTI.
Born on October 19, 1947, Shah studied direction at the Film and Television Institute of India in Pune and made his directorial debut with "Jaane Bhi Do Yaaron" in 1983.
The movie featuring Naseeruddin Shah, Ravi Baswani, Om Puri, Pankaj Kapur, Satish Shah, Satish Kaushik, Bhakti Barve and Neena Gupta went on achieve a cult status despite a poor response at the box office.
The movie revolved around two struggling photographers, who fall into a dirty nexus of corruption and murder.
Shah made a switch to television after "Jaane Bhi Do Yaaro".
He teamed up with Saeed Akhtar Mirza for his debut TV show "Nukkad".
One of the most popular shows in the '80s, "Nukkad" gave Indian audiences memorable characters like Khopdi, Kaderbhai and Ghanshu Bhikari.
Shah made his Bollywood comeback in 1993 with Shah Rukh Khan-starrer "Kabhi Haan Kabhi Naa". The film received critical acclaim and is counted among Shah Rukh's best performances.
His next "Kya Kehna", was once again a story that was ahead of its time and dealt with teenage preganacy and the stigma attached to it.
The movie was a box office success and became one of the highest grossing films in 2000. The film helped establish Preity Zinta's career in the Hindi film industry.
Shah's sudden demise shocked his friends in the industry.
His friend and colleague Satish Shah, who played one of the principal characters in "Jaane Bhi Do Yaaro", told PTI, "I just got to know about Shah's demise. I have reached his house. It is really sad."
Director Hansal Mehta paid tributes to Shah by posting a black and white photograph of "Jaane Bhi Do Yaaro" team.
"'Jaane Bhi Do Yaaro' RIP Kundan Shah. Sad news," he wrote.
Filmmaker Mahesh Bhatt remembered Shah as a brave man "who added vigour to the alternate cinema stream with movies like 'Jaane bhi do yaaro'".
Karan Johar said, "RIP Kundan Shah... A cult filmmaker ... A solid story teller."
Sudhir Mishra said the director was a huge influence of him when he was a 22-year-old and helped him find his voice.
"It's probably wrong but I can't help but imagine Kundan Shah and Renu Saluja meeting and arguing over a cut and maybe Ravi Baswani is mediating!" he added.
Riteish Deshmukh said, "RIP Kundan Shah.... A master storyteller no more. Condolences to the family and loved ones.
Disclaimer: No Business Standard Journalist was involved in creation of this content
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