Khan, believed to be a Norwegian, left the country for Norway in an Air-India flight.
Police officials said Khan had been working in India without a proper work permit and that she had refused to respond to repeated notices sent by authorities on the issue.
"We sent her a notice one month back but she didn't respond. She was working here without proper documents," Mumbai Police Commissioner A.N. Roy told reporters.
Bollywood reacted with shock to the sudden deportation of Khan, terming the treatment meted out to her as inappropriate. "The manner in which she has been deported is absolutely indecorous," said leading filmmaker Mahesh Bhatt.
Khan was summoned to the Foreigners Regional Registration Office (FRRO) Monday as her papers were allegedly not in order, said Roy, noting the actress was asked to leave India after she failed to explain her position.
It was unclear if her documents were forged or had expired. Khan had been working in India for the past two years.
Before leaving, Khan told a television channel she was driven to the airport without any notice.
"They did not even let me pick up my clothes...I don't know why they are taking me away like this," Khan told Aaj Tak channel when its reporters called her on her mobile phone.
"I had gone to the FRRO office to sign some papers...There is nothing wrong with my visa...it says I work here...They are not allowing me to even call a lawyer," she complained.
The official who was with her in the car said she was being deported because her papers were not in order.
Khan has been caught up in controversies before. The bold starlet last made headlines when photographs purporting to be those of her modelling topless for a Norwegian magazine were revealed last year.
Sources close to Khan said her husband and model Sahil Khan would seek legal help to gain custody of the actress' bank accounts and other belongings and coordinate with immigration authorities to secure a proper permit.
"At this point of time, we don't know when she will be able to return to India. We don't even know whether she would like to return to this country after being subjected to this humiliation," said a source.
Police officials said Khan's arrest and her deportation was part of a larger crackdown against foreigners working in India's film and advertising industry without valid papers.
They, however, did not say if any other film personalities were facing a probe.
Indian actors and models have for long been complained that non-resident Indians come to India on tourist visas and pick up plum projects.
Filmmaker Mahesh Bhatt said Khan should have been given opportunity and time to clarify her position.
"The violation of laws of the land should not be tolerated but let's not forget that this is not the first case where a foreign actor has been subjected to this kind of treatment," he said.
Bhatt said he too had faced the "high handedness" of immigration officials when South African Ilene Hamann had exceeded her work permit limit by a couple of days while shooting for his film "Rog".
"I had a tough time trying to rescue Ilene," said the noted filmmaker.
Foreign actors playing lead roles in Bollywood was unimaginable until a few years ago. But things have changed in recent times with scores of overseas professionals lining up to audition for roles.
"Negar Khan has been treated like a criminal. We were not allowed even to speak to her on phone. Her mobile phone was confiscated," said a harried filmmaker whose forthcoming project with Khan in the leading role is yet to be finished.
"If cases like this continue to happen, then no one would like to come from other countries to work here. We need to show some sensitivity towards actors," he said on condition of anonymity.