The funeral was attended by lyricist Gulzar, actors Amitabh Bachchan, Danny Denzongpa, Shatrughan Sinha, Anupam Kher and Shakti Kapoor, and director Karan Johar.
Pran, 93, died last night in Lilavati Hospital where he had been admitted last month.
"It is indeed a very sad day for us. The last rites were performed by both the sons," his daughter Pinky told news agency PTI.
Pran received the Dadasaheb Phalke Award this year in May. He was unable to travel to Delhi to receive the award at the presentation ceremony because of ill health. He was given the award at his home in Mumbai the next day.
Pran, star of films such as Zanjeer and Amar Akbar Anthony, began his career as a hero in Punjabi films, made a tremendous impact on Bollywood as the villain in Dilip Kumar's Ram Aur Shyam and was the first actor to break stereotype by playing character roles as well. In the '70s, there was almost no major film that did not feature Pran and he was often higher paid than the hero. Pran was credited with making the role of the villain as important as the hero's, and was known for his sophistication and style on screen.
Pran was also credited with helping actor Amitabh Bachchan get his biggest break - Zanjeer, which marked the rise of the Angry Young Man and made Amitabh Bachchan famous. Pran played one of his best known roles - the Pathan Sher Khan - in Zanjeer. He and Amitabh Bachchan formed a long and successful screen partnership after Zanjeer and struck up a lifelong friendship. Pran made one of his last public appearances at Amitabh Bachchan's 70th birthday party in October last year.
Pran's other famous films include Madhumati, Half Ticket, Upkar, Kashmir Ki Kali, Don, Karz, Naseeb and Shahenshah. He last appeared on-screen in 1997's Mrityudaata.
He is survived by his wife Shukla, daughter Pinky, and sons Arvind and Sunil.
(With inputs from PTI)