An urn containing the ashes was opened and they were mixed with water from the Arabian Sea by his great-granddaughter Nilamben Parikh.
The ceremony was in accordance with Hindu rites.
Gandhi - called Mahatma or "Great Soul" - spearheaded a non-violent campaign against the British Raj.
'Come together'
His campaign culminated in India getting its independence in 1947.
"It is a day of thought and reflection for me and for all of us who can now look to carry his thoughts forward," Ms Parikh, 75, said.
"I feel on this occasion the whole nation will come together."
She and 10 other family members - descendants of Gandhi's four sons - boarded a boat and scattered the ashes about 1km (0.6 miles) out to sea.
Ms Parikh is descended from Gandhi's eldest son, Harilal, who had a turbulent relationship with his father and was not at his funeral, contravening Hindu tradition by which the eldest son lights the father's funeral pyre.
Her participation in the ceremony has been described by family members as a gesture of reconciliation.
After Gandhi's cremation, his ashes were distributed in 20 different containers to towns and villages across India for memorial services.
Some were kept and worshipped by wealthy industrialist families who supported Gandhi during his lifetime.
Moral conscience
In 1997, one such urn was found in a bank locker in the state of Orissa. They were later immersed in keeping with the family's wishes.
The BBC's Prachi Pinglay, who attended the Mumbai ceremony, says that many of those present at Chowpatty beach were in their seventies.
Assassin who still divides
Indian Home Minister Shivraj Patel and Maharashtra Governor SM Krishna represented national and state governments.
The ashes were taken to sea after police formed a guard of honour.
Gandhi was assassinated by a Hindu fanatic in 1948. Today he is widely revered as the nation's moral conscience.
His principles of truth and non-violence have been widely followed and worshipped.
However, some Hindus question his philosophy of non-violence.
Wednesday's ceremony was deeply moving for 72-year-old lawyer Trivedi, who stood at the barricade in Mumbai and watched his wife Usha Trivedi go with the boat to immerse the ashes.
He watched the media scuffle with police as they jostled to get on other boats to cover the ceremony with a certain amount of sadness.
"Isn't it an irony that when ashes of a man who practiced peace and non-violence are being immersed, there is so much commotion and chaos?" he asked.
As the ashes dropped deep into the sea, another follower with childhood memories of Gandhi, 72-year-old Dr Vora, was overcome with emotion.
"Hope he is reborn," she said.
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