Sippy died Tuesday night from "age-related ailments," the Press Trust of India said.
He was best known for the legendary 1975 film, which was directed by his son Ramesh Sippy. It tells the story of a pair of petty criminals who go after a big-time bandit for the reward money.
Sippy came from a rich family and got his start in 1955, directing the film "Marine Drive," named after Mumbai's beachfront road.
He produced some 20 films and directed another five across an award-winning career that spanned four decades.
A remake of "Sholay" this year, with Bollywood icon Amitabh Bachchan -- who played one of the heroes in the original three decades ago -- in the role of bandit Gabbar Singh, tanked.

Copyright AFP (Agence France-Presse), 2007