The London-born actor, who shot to fame with Danny Boyle's 2009 Oscar-winning film "Slumdog Millionaire", plays an Australian-Indian who tries to find his lost family in India through the help of Google map.
"I'm sitting here with my mouth wide open figuring out how this happened. I'm feeling overwhelmingly grateful right now," Patel told BBC following the nomination.
"Lion" is based on the real life memoir of Saroo Brierley titled 'A Long Way Home' and he took six months to prepare for the role which he believes is a career-defining part for him.
"The film has opened people to my potential. After 'Slumdog Millionaire', it was really hard for me to get quality work. You think it would be easy but it is actually quite a struggle. I felt pigeon-holed.
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"But I kept working hard and have been patient for many years now. So, when a role like this came, I gave everything that I had to do justice to it. It feels really good when it is recognised," Patel said in a recent interview.
The 2017 Academy Awards ceremony will take place in Hollywood on February 26.