She breathed her last at her residence in Purani Haveli on Tuesday morning. She is survived by her only daughter Rasheedunnisa Begum.
"It's a big loss to the family as Sahebzadi Basheerunnissa Begum Saheba was an epitome of Hyderabadi culture, tradition and values," Nizam's grandson and president of Nizam Family Welfare Association Nawab Najaf Ali Khan told IANS.
She was buried at Dargah Hazrat Yahiya Pasha in the old city of Hyderabad. Several members of the Nizam's family participated in the funeral.
Basheerunnissa Begum was married to Nawab Kazim Yar Jung, better known as Ali Pasha, who passed away in 1998.
Mir Osman Ali Khan, who was the world's richest man of his time, died in 1967.
The last Nizam had refused to accede to India after the country's independence on August 15, 1947. He wanted to remain an independent state or join Pakistan.
The princely state finally merged with the Indian Union in September 1948 after an operation by the Indian Army.