He was 90.
He passed away this morning at a private hospital in Nashik, they said.
Popularly known as 'Nihalbhai', he was also the first mayor of the Malegaon Municipal Corporation.
His mortal remains will be taken to Malegaon later in the day, sources added.
Ahmed was admitted to the hospital last night for
respiratory problems, sources added.
He was also the Leader of Opposition in the Maharashtra Legislative Assembly from 1986-1989.
Ahmed is survived by wife, four sons and three daughters.
His body will be buried at the 'Bara Sonapura Kabrasthan' in Malegaon at around 9 pm tonight.
Meanwhile, local politicians cutting across party lines from Nashik paid floral tributes to Ahmed.