Bachchan is the first film personality to be honoured with a honoris causa by one of India's premier university, since it was established in 1922.
Dressed in a red robe and a graduation hat, the actor thanked the ecstatic crowd present at the university auditorium.
"First of all, I would like to thank the cheering crowd of students from Kirori Mal College seated amongst you in this auditorium," said Bachchan, 64, who is an alumna of that college.
"Who would have thought that an average student, not extraordinary by any means, would one day be awarded such an overwhelming homecoming," he said.
Thanking his college for instilling the right values in him as a young man, Bachchan said that some of the most memorable moments of his life were spent in the university campus.
His wife Jaya Bachchan and son Abhishek were present in the audience.
Honours and laurels have been pouring in for Bachchan in recent times. Earlier this year, he was awarded an honorary Doctorate of Arts from the De Monfort University in Leicester, Britain.
On his birthday last month, the French Government honoured him with its highest civilian award, the officer of the Legion of Honour for his contribution to Indian and international cultural life.
"When he recalled his moments spent in Kirori Mal College, we could not help ourselves from screaming and clapping out loud. He is the biggest amongst our alumni, an idol for many of us. We had always heard stories about him and seen him only in films. The experience of seeing him in person was great," Pankaj Sharma, general secretary of the Kirori Mal College students' union, told.
Apart from Bachchan, Delhi Chief Minister Shiela Dikshit, cartoonist R.K. Laxman and scientist C.N.R. Rao were conferred with honorary doctorates on the occasion.
Bachchan completed his Bachelor of Science (B.Sc) course in 1967 from Delhi University's Kirori Mal College and has been an inspiration for its students over the years. Those seeking to emulate his success story start by joining the college's elite Dramatics society known as "Players".