Bhattarai, 87, who played key role in drafting the Constitution of Nepal in 1990 that guaranteed constitutional monarchy and multi party democracy, died due to multiple organ failure.
A doctors` team led by India`s noted cardiologist Dr Bharat Rawat was involved in his treatment since he was admitted to the hospital three weeks ago.
Bhattarai, the last surviving founding leader of Nepali Congress (NC), had spent 13 years in jail fighting to restore democracy in the country.
"The doctors pronounced him dead at 11:26 pm. He died of cardiac arrest," Executive Director and Consultant Cardiologist at the hospital Dr Rawat said.
President Dr Ram Baran Yadav had visited the hospital at around 10 in the evening just an hour before Bhattarai`s death after doctors decided to withdraw the life supporting system which was installed for supplying oxygen and waited for natural death.
"He was witty, humorous, intelligent, always smiling and non-complaining person," remarked Dr Rawat, who has been treating him for the past 12 years.
Bhattarai was the Prime Minister of the Interim Government in Nepal after the successful People`s Movement of 1990 which brought democracy to the country.