Ms Dikshit, who also served as Governor of Kerala, is credited with transforming Delhi's infrastructure, improving the public transportation system and helping it become a less polluted city, as well as developing on health and educational fronts.
Sheila Dikshit took over as Delhi Congress chief in January after party colleague Ajay Maken stepped down citing ill health. She led the Congress's Lok Sabha election campaign in the national capital but could not defeat the BJP, which won all seven seats.
Ms Dikshit contested the polls from Delhi North East against BJP Delhi chief Manoj Tiwari but lost by over 3.6 lakh votes. After the defeat she offered her resignation to then party president Rahul Gandhi, but the offer was declined.
She was named the party's chief ministerial candidate for the 2017 Uttar Pradesh Assembly polls. However, she withdrew after an alliance with the Samajwadi Party, explaining that the presence of Akhilesh Yadav meant there could not be two chief ministerial candidates.
She also served as the Governor of Kerala in 2014 but resigned after five months following a stand-off with the BJP government over gubernatorial appointments.
Ms Dikshit, who made her political debut as a parliamentarian from the Kannauj seat in Uttar Pradesh in 1984, shared a strong rapport with the Gandhi family. That relationship helped her become president of the faction-ridden Delhi Congress in May 1998.
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Sheila Dikshit was a close associate of former PM Rajiv Gandhi and a minister in his cabinet.
Six months later she had turned the party around and led it to victory in assembly elections. A key battleground in that election was the high price of onions. The Congress claimed an impressive 52 of 70 seats and Sheila Dikshit served the first of her three terms as Delhi Chief Minister.
She went on to lead the party to victory in two successive elections, before losing to the Aam Aadmi Party (AAP) in December 2013. She also lost her bid to be elected from the New Delhi constituency in that election, losing to current Delhi Chief Minister Arvind Kejriwal.
However, Ms Dikshit's third term was marred by 2010 Commonwealth Games scandal, in which she was blamed for costing her government Rs. 31 crore in losses by opting to use imported equipment for street lighting in the city during the games.
A graduate in History from the University of Delhi, Ms Dikshit's interests outside politics extends to the promotion of handicrafts and folk theatre. She served as executive secretary of the Garment Exporters' Association between 1978 and 1984, before entering politics.
Born on March 31, 1938 in Kapurthala in Punjab, she married the late Vinod Dikshit, a civil service officer, and cut her political teeth serving as an assistant to Uma Shankar Dikshit, her father-in-law and a Uttar Pradesh Congress leader who served as a minister in Indira Gandhi's cabinet.
It was Indira Gandhi who noticed Sheila Dikshit's leadership potential and picked her to be part of a 1984 delegation to the United Nations Commission on the Status of Women. That same year she also became a Minister of State for Parliamentary Affairs in the Rajiv Gandhi government.
Congress leader Rahul Gandhi said he was "devastated" to hear of Sheila Dikshit's death. In his condolence message, Prime Minister Narendra Modi, who reiterated her contribution to Delhi's development, described Sheila Dikshit as "blessed with a warm and affable personality".
Delhi Chief Minister Arvind Kejriwal and Home Minister Amit Shah also expressed their sorrow.
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