"Desai's body was found hanging with a rope in the morning at the N D Studios," Raigad Superintendent of Police Somnath Gharge said.
The studio is located in the Karjat area of Raigad, about 50 km from Mumbai.
After being alerted, police rushed to the spot, the official said.
The police are investigating the case from all possible angles, Gharge said.
Desai, who was in his late 50s, served as art director and production designer for a number of Bollywood and Marathi movies.
He was also known for his art work in films such as "Jodhaa Akbar" and "Prem Ratan Dhan Payo".
The art director's death sent shock waves across the industry with film personalities such as Hema Malini, Riteish Deshmukh, Siddhartha Basu, and Neil Nitin Mukesh mourning Desai's passing.
Actor-politician Hema Malini said Desai's death was a "terrible loss" to the film industry.
"Such a warm human being, associated with many of my projects and ballets... May he find peace wherever he is," she tweeted.
Neil said it is difficult to accept the heartbreaking news of Desai's death. The late art director worked on "Jail", the 2009 film starring the actor.
"Our beloved #nitindesai has left for his heavenly abode. He was simply a genius. A visionary artist with grace, style who understood not just his craft but people. He was a positive soul who spread only love to all. My God give his family strength. Om Shanti," he wrote on the microblogging site.
Basu, who worked with Desai on popular reality shows such as "Kaun Banega Crorepati" and "Dus Ka Dum", said he was shocked to hear about the passing of his "friend and artistic collaborator".
"He made sets for so many of our shows - KBC, Kamzor Kadi, Heartbeat, Bluffmaster, Dus ka Dum, Sach ka Saamna.. Conjuring world class installations on an industrial scale. Om shanti," Basu wrote on Twitter, which was recently rebranded as X.
In his career spanning over 30 years, Desai closely worked with directors like Vidhu Vinod Chopra, Sanjay Leela Bhansali, Rajkumar Hirani, and Ashutosh Gowariker.