She was 31.
Aarthi, whose last film Ranam 2 released in Indian theatres on June 5, suffered from respiratory problems following a botched liposuction surgery earlier today.
The actress, who had allegedly attempted suicide in 2005, tied the knot with US-based Ujwal Kumar after a six-month courtship in 2007.
Originally from Gujarat, Aarthi made her Telugu acting debut opposite Venkatesh in the hit Nuvvu Naku Nacchavu and went on to star in more than 20 films.
Several South Indian stars took to Twitter to mourn the actress's tragic death:
Manoj Manchu: 'Rip Arathi Agarwal .... Such a heart breaking news ...'
Nani: 'Shocking .. Aarthi agarwal is no more ..how unpredictable life is .. Very sad .RIP'
Sundeep Kishan: 'RIP Aarthi Agarwal..too young to be taken away..really unfortunate..'
Image: Aarthi Aggarwal in Gorintaku