Raj Kapoor and Nargis in a still from the film Awaara.
"The '50s films he headlined and directed became huge hits not just in his newly freed homeland but also across the Arab crescent from Indonesia to North Africa," Time noted.
Kapoor, who modelled his screen persona on Charlie Chaplin's Little Tramp, was 26 when he filmed Awaara (The Tramp).
Time calls Awaara as "a glistening showcase for Kapoor and the great India siren Nargis (his lover onscreen and off)."
"And of course it's a musical, whose main song, Awaara Hoon, by the famed Shanker-Jaikishan duo, soared to the top of the pop charts in India, the USSR and China."
The original All-Time 100 list published in 2005 included Satyajit Ray's The Apu Trilogy, Mani Ratnam's Nayakan and Guru Dutt's Pyaasa.
Bollywood composer AR Rahman's score for Mani Ratnam's Roja (The Rose), the tale of a woman whose lover is kidnapped by terrorists, was also among 10 Best Soundtracks.
Last week, Time magazine ranked Bollywood director Sanjay Leela Bhansali's 2002 film Devdas eighth among the ten greatest movies of the millennium (thus far).