The move has prompted a furious response from nuclear-armed rival Pakistan and has also raised fears of further violence in the Muslim-majority Himalayan region.
Reactions have been mixed as India scraps the special status governing Kashmir, a restive region contested by Pakistan, to bring it under New Delhi's direct rule.
India's Prime Minister Narendra Modi's Hindu-nationalist party rushed through a presidential decree to scrap from the constitution the Indian-ruled part of the disputed territory's special status.
It also moved a bill proposing the Indian-administered part of Kashmir be divided into two regions directly ruled by New Delhi. Senior minister Prakash Javadekar told parliament historic work had been completed.
"There is peace in Kashmir and this step is being welcomed all over the world because injustice is ending," he said.
"Kashmir was a paradise, is a paradise and will remain a paradise," Home Minister Amit Shah added.
But Manoj Jha from the Rashtriya Janata Dal party said the opposition had "opened the way for Kashmir to become Palestine".
"I urge you to let go of your ego and embrace Kashmiris," he added.
Former Jammu and Kashmir mediator Wajahat Habibullah was expecting a strong reaction from Kashmir.
"It's already in a state of unrest and this will only make it worse," he said.
"If you want people to accept a decision, you need to persuade them and communicate with them."
The foreign ministry said in a statement: "No unilateral step by the Government of India can change this disputed status... As the party to this international dispute, Pakistan will exercise all possible options to counter the illegal steps."
Pakistan condemned India's move to abolish Kashmir's special status as "illegal", insisting it was an internationally recognised disputed territory.
Former Jammu and Kashmir chief minister Mehbooba Mufti said: "The abrogation of Article 370 hasn't just made accession null and void but also reduces India to an occupation force in Jammu and Kashmir."
Human Rights Commission of Pakistan chair Mehdi Hasan feared a "gathering storm".
"The physical security and fundamental rights of Kashmiri citizens on both sides of the border are at stake," he said.
"Their safety and rights must not be barefacedly trampled."
Kashmir has been divided between Indian and Pakistan since their independence in 1947.
For three decades the Indian-administered part has been in the grip of an insurgency that has left tens of thousands dead.
Armed Kashmiri rebels and many residents have fought for the region's independence or to join neighbour Pakistan.
There were already growing fears among Kashmiris that the special status would be ditched after Modi's Bharatiya Janata Party (BJP) obtained a large parliamentary majority in recent elections.
His party had vowed to fulfil a long-held promise to scrap the laws, and many fear New Delhi wants to change the region's demographics by allowing non-Kashmiris, mostly Hindus, to buy land locally.
The move is set to exacerbate the already bloody rebellion in Kashmir and deepen the long-running animosity with nuclear rival Pakistan which has fought two out of three wars with India over the territory.
"There will a very strong reaction in Kashmir. It's already in a state of unrest and this will only make it worse," Wajahat Habibullah, a former senior bureaucrat in Jammu and Kashmir, told AFP.
'Darkest day for democracy'
The announcement sparked chaotic scenes in the national parliament, and the main opposition Congress party described it as a "catastrophic step".
One lawmaker from the regional Kashmir-based Peoples Democratic Party tore up a copy of the Indian constitution before being reportedly removed from the chambers by parliamentary marshals.
Condemning what she described as Indian democracy’s "darkest day", former Kashmir chief minister Mehbooba Mufti tweeted that Delhi’s move was illegal and unconstitutional, and would make India "an occupational force" in the state.
The announcement follows days of uncertainty in the region that began on Friday when New Delhi ordered tourists and Hindu pilgrims to leave "immediately".
All phones, internet services and cable networks in the restive Himalayan region of more than seven million people were cut at midnight, and only residents issued with a curfew pass were allowed on the streets.
Article 370 of the Indian constitution gave special status to the state of Jammu and Kashmir.
It limited the power of the Indian parliament to impose laws in the state, apart from matters of defence, foreign affairs and communications.
Concern over militant attacks prompts crackdown
Monday’s announcement came hours after authorities launched a clampdown in Kashmir by suspending telephone services and placing state leaders under house arrest.
Telephone and internet services were suspended early on Monday, and state leaders wrote on Twitter that they had been put under house arrest.
On Sunday, a meeting of regional parties had vowed to safeguard the region’s special status, saying any move to scrap the privilege would amount to aggression against the people of the state.
Tensions have risen since Friday when Indian officials issued an alert over possible militant attacks by Pakistan-based groups.
Pakistan has rejected those assertions, but thousands of alarmed Indian tourists, pilgrims and workers streamed out of the region over the weekend.
Additional reporting: Reuters