Priyanka Gandhi's son Rehan lit the pyre.
A host of dignitaries, including Sonia Gandhi, Rahul Gandhi, Priyanka Gandhi, Robert Vadra and Union Minister Farooq Abdullah were present at the Lodhi Road crematorium.
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Other dignitaries present at the crematorium were Delhi Chief Minister Sheila Dikshit, BJP leader Arun Jaitley, Union Ministers Sachin Pilot and Anand Sharma.
Nehru, who was Minister for Internal Security in Rajiv Gandhi's government, had passed away in a hospital in Gurgaon last night.
He is survived by his wife Subhadra and two daughters.
Lucknow-born Nehru was a three-time Lok Sabha member.
Nehru had a successful career in the corporate world before joining politics in the early 1980s.
When Rajiv Gandhi became the Prime Minister in 1984, he was his close adviser and Minister of State for Internal Security. However, he fell out with Rajiv later.
Nehru was accused by the CBI of causing a loss to the exchequer in a pistol deal with Czechoslovakia in 1988 during his tenure as Minister of State.
The Supreme Court had recently stayed the proceedings in the case.