Sahgal (97), breathed her last at a private hospital at 11.20 am, her daughter and noted Communist Party of India-Marxist leader Subhashini Ali said.
Sahgal, who was ill for some time, was admitted to the hospital on July 19 after she suffered a heart attack at her residence in Civil Lines area of the city. She was kept on life support system.
She was very active during the Independence movement and had commanded the 'Rani of Jhansi Regiment' of the INA formed by Bose.
A doctor by profession, Sahgal was working as a medical practitioner and a social worker. She was awarded the Padma Vibhushan in 1998.
Born as Lakshmi Swaminathan to noted lawyer Dr S Swaminathan and social worker Ammu Swaminathan in Chennai on October 24, 1914, Sahgal obtained her MBBS degree from the Madras Medical College in 1938.
In 1940, she went to Singapore for further studies before coming back to India in 1943 to join the INA. She married Colonel Prem Kumar Sahgal in 1947 and had been residing in Kanpur since then.
Expressing grief over the demise of Sahgal, senior CPI-M leader Brinda Karat remembered her as a "highly politically motivated human being who fought injustice wherever she saw it".
"She was a veteran CPM leader and also a great freedom-fighter. She served people with every ounce of strength," Karat said, terming Sahgal as a "symbol of courage" and a "symbol of woman's expression".
Ali said Sehgal's first love was always her profession.
"Just weeks before falling ill, she used to regularly sit in her clinic to see patients," she said, adding that Sahgal would treat everyone who came to her, regardless of whether the patient had money or not.
Sahgal, who was residing in Kanpur since 1952, was also very close to her filmmaker grandson Shad Ali, and would "never miss" any film directed by him, her daughter said.
Sehgal joined the CPI-M in 1971 and was elected to the Rajya Sabha on the party's ticket.
She also contested the 2002 presidential polls against Dr APJ Abdul Kalam as a candidate for the Left parties but lost.
Sahgal's body will be donated to the CSJM medical college in Kanpur for medical purposes, Ali said.