Mehta is considering wearing an old tissue sari, that was part of her mother's trousseau, for the 79th Annual Academy Awards, says Sheeraz Hassan, the founder of www.Hollywood.tv.
"It (the sari) is plain gold and very elegant. I think it's right to wear mom's sari," said Mehta, who is looking forward to walking Hollywood's red carpet when the gold statuettes are handed out Feb 25.
The filmmaker said there were tears, champagne and joyful jumps when she learnt of the Oscar nomination.
Mehta said she was a "bundle of nerves" while watching the TV announcement along with daughter Devyani Saltzman, publicist Bonne Smith, producer David Hamilton and distributor Hussain Amarshi.
"My daughter was jumping up and down and Hamilton started crying and Amarshi opened a bottle of champagne and we were just jumping. We were like kids," she added.
"Water" competes with "After the Wedding" (Denmark), "Days of Glory" (Algeria), "The Lives of Other" (Germany) and "Pany's Labyrinth" (Mexico) for the best foreign film.
A graduate in philosophy from the University of Delhi, Mehta started her film career as a screenwriter for children's films. She directed her first full-length feature film "Sam & Me" in 1991, starring Om Puri in a pivotal role.
The film, which revolved around a relationship between a young Muslim boy and an elderly Jewish gentleman living in Parkdale, Toronto, won her a 'honourable mention' in the Camera d'Or category in Cannes Film Festival in 1991.
"Camilla" followed in 1994, for which she teamed up with Bridget Fonda and Jessica Tandy.
In India, Mehta is best known for her elements' trilogy, which evoked controversies because of their taboo subjects.
The Nandita Das and Shabana Azmi-starrer "Fire" in 1996 courted controversy by taking on lesbianism. Than came "1947: Earth" in 1998 - the story of India's partition 1947 through the eyes of a young Parsi girl.
However, it was "Water" that earned her maximum flak in India. Mehta launched the film in 2000 with Shabana Azmi, Nandita Das and Akshay Kumar but violent protests forced her to stall it temporarily.
Protestors burnt down the film's sets in Varanasi and Shiv Sena activists threatened immolation if she went ahead with the film. Mehta then shot the film in Sri Lanka with a new star cast that included Lisa Ray and John Abraham.
A heart-wrenching tale of Indian widows in the 1930s, the film was completed in 2003 and had its first screening at the Toronto Film Festival in 2005.
Mehta is currently preparing for her next venture titled "Exclusion", which may star Amitabh Bachchan and John again, based on Canada's 1914 Komagata Maru incident.
Komagata Maru was a Japanese steam-liner that sailed to Canada in 1914, carrying 376 passengers from Punjab, India. The Asian immigrants were not allowed to land and the ship was forced to return to India.
For now Mehta is overjoyed with her Oscar nomination. Canada last bagged the coveted award in 2004 for Denys Arcand's "The Barbarian Invasions".