Chandy was suffering from cancer for the past few years and was under treatment in the US.
He was last seen in public in November when he condemned Ajit Pawar for joining hands with the BJP after he was named the Deputy Chief Minister of Maharashtra.
After that Chandy left for the US. He returned here 10 days back and breathed his last at his home. The funeral will take place on Monday.
NCP is an ally of the ruling Left Democratic Front in Kerala and its strength in the Kerala Assembly has now come down to two after the demise of Chandy.
Chandy was a three-time legislator and represented the Kuttanad Assembly constituency in Alapuuzha district.
Chandy was the state Transport Minister in the present Pinarayi Vijayan cabinet from April to November in 2017, but had to quit after an alleged land grab for a resort owned by Chandy became big news.
Chandy was a late entrant to full-time politics, as his principal vocation was that of a successful businessman with varied interests in Kuwait.
Chandy was very close to veteran Congress leader K. Karunakaran, but despite the latter's best efforts, he was unable to get him to contest on a Congress ticket.
Chandy's full-time political career began when Karunakaran broke away from the Congress and formed the Democratic Indira Congress (DIC) in 2005.
In the 2006 Assembly polls, DIC was an ally of the Congress-led United Democratic Front (UDF). Chandy won in the elections and subsequently DIC merged with the NCP.
When Karunakaran's son K. Muraleedharan, who was the Kerala NCP President, returned to the Congress, Chandy remained with NCP, which was taken back to the CPI-M-led Left Democratic Front.
In April 2018, he was elected as the state NCP President.
Chandy is survived by his wife, a son and two daughters.
( With inputs from IANS )