Thackeray passed away at 3.33pm, his doctor Jaleel Parker told a massive crowd outside his residence Matoshri, a Mumbai landmark.
The leader's body will be kept at Shivaji Park to enable party activists and Mumbaikars to pay their last respects from 7am on Sunday, party MP Sanjay Raut told reporters, even as he appealed to Shiv sainiks to "maintain calm and remain peaceful".
Thackeray's body would be consigned to flames Sunday evening at a crematorium beside Shivaji Park, a party official said.
Though there was no panic or uncivil reaction to the demise in Mumbai, shops and establishments, restaurants and tea stalls shutdown, cinemas cancelled shows and functions were called off or postponed.
Outside Matoshri, over 5,000 Shiv sainiks wept.
Mumbai, Thane and Raigad, considered Shiv sena bastions, ground to a halt as did the rest of Maharashtra.
The man who for decades lorded over one of the largest states in the country is survived by two sons - political heir and Shiv Sena executive president Uddhav Thackeray and filmmaker Jaidev.
A widower, Thackeray's wife Meena and his eldest son Bindhumadhav passed away in 1996.
His nephew Raj Thackeray, once considered his political heir, broke away to form Maharashtra Navnirman Sena, competing with Shiv Sena in espousing rightwing views championing Marathi pride and exclusivism at the expense of other communities in India's richest and most industrialised state.
Bal Thackeray leaves behind a legacy of anti-migrant poison that has been the scourge of Mumbai, the country's financial and entertainment capital.
Bal Thackeray, who made no secret of his admiration for Hitler, started his career as a cartoonist with the Free Press Journal in the 1950s. In 1960, he started a cartoon weekly called Marmik, and used it to campaign for a unified separate Maharashtra state, and against Gujaratis and south Indian workers migrating to then Bombay.
However, despite allying with the BJP on the saffron plank, Bal Thackeray and his Sena could never reach out of Maharashtra.
However, Balasaheb - as he was also called - was instrumental in ending the Congress hegemony in Maharashtra when his party and the BJP allied and formed a government in 1994. Though the two parties shared power in New Delhi between 1998 and 2004, Thackeray never occupied any office.
Balasaheb later began sporting a stylish beard and wore twin bead necklaces in the manner of Hindu gurus and ran the Shiv Sena like a local militia.
Active till the end, Bal Thackeray, who never hesitated to practice his particular brand of street politics, had just days ago on Nov 5 asked party activists "not to permit" the forthcoming cricket matches between India and Pakistan.
In an appeal in party mouthpiece Saamna, he had lashed out at home minister Sushilkumar Shinde for his statement "to forget the past" and play cricket with Pakistan.
Thackeray was ailing for about two years and was under regular medical treatment at Matoshri. In the last week, his health deteriorated sharply.
According to party leaders, a virtual ICU had been recreated at Matoshri with all emergency equipment and medical and paramedical staff on duty round-the-clock.
Son Uddhav Thackeray was fielding scores of visitors, politicians and showbiz celebrities as this city remained on the edge for the last few days with heavy police deployment outside his residence and in trouble spots around the city.
The leader's influence extended not just over politics and society but also over the film industry, evident from the beeline celebrities made to Matoshri to enquire about his health. The list included Amitabh Bachchan and son Abhishek, Salim Khan and son Salman Khan to Rishi Kapoor and brother Randhir and Lata Mangeshkar.
Following his death, condolences poured in from President Pranab Mukherjee, Prime Minister Manmohan Singh, Congress president Sonia Gandhi, BJP leaders L.K. Advani, BJP president Nitin Gadkari, Maharashtra chief minister Prithviraj Chavan and others, cutting across political lines.