would return to earth in a new incarnation.
"I am deeply saddened by the news of the passing away of Sathya Sri Sai Baba in India," the Prime Minister said in his message after the ailing spiritual leader died in hospital on Sunday.
"He was a great teacher for millions of people all around the world (who had) a great following in Nepal also. He spread mainly the message of peace in the world."
At least three former prime ministers of Nepal have been devotees. So was Nepal's popular king Birendra Bir Bikram Shah, who visited the Baba's ashram in Puttaparthi town in India in 2000, a year before his assassination.
Former deputy prime minister Sujata Koirala had earlier reminisced about her meeting with the Indian guru along with her father, Girija Prasad Koirala, when she said Sathya Sai Baba gave them a token of his blessing.
Marts and businesses are named after Sai Baba in Nepal while his photos hang in shops and private offices.
The Sathya Sai Central Trust in Kathmandu says there are 186 Sai centres in Nepal with the capital alone hosting nearly four dozen. The followers are estimated to be over 1 million.
When news of the guru's death broke on Sunday, many devotees from Nepal headed for the ashram in India to pay their last respects. More would be departing on Monday, trust officials said.
Prayers and mourning started at the Sai centres in Nepal with staunch devotees saying the 86-year-old would be reborn.
A follower, identified only as Dhungana, said the guru had said that he would die at the age of 96.
"(He) left us 10 years earlier," the man was quoted as saying Monday. "We believe Baba will come again to this world."
Nepali film star Shiv Shrestha, who was a household name in Pakistan as well having played leading roles in Pakistani films, said he became a Sathya Sai devotee after visiting the guru's ashram 11 years ago.
Since then, he began answering phone calls using the greeting popular among followers: Jai Sai Ram.
Shrestha said he began spreading the guru's teachings among other stars in Nepal's film industry, impressed by the latter's diktat that the "hand serving people was greater than the tongue singing bhajans (devotional songs)".
"I hope each age has a great leader like Sai Baba," the star said.