Danish Parkar, a nephew of Dawood Ibrahim, died in a road accident on the outskirts of the city, said police officials on Thursday.
Danish, son of Dawood's elder sister Haseena Parkar, died late on Wednesday when his car collided with a truck on the Mumbai-Goa highway, said a police official.
The driver of Danish's car also died on the spot, while two other co-passengers were admitted to a local hospital in a critical condition.
Danish was returning to Mumbai from Goa when the accident happened.
Although there was no major offence registered against Danish, police officials said he often used to indulge in petty crimes.
The police were also keeping a tab on him to ascertain Dawood's whereabouts.
A case of assault was registered against Danish earlier this month following a scuffle with his neighbour.
He was later released on bail. A resident of central Mumbai, Danish was also allegedly involved in a fake passport case.