The fire also swept through hundreds of tenements late on Friday near railway tracks where Ali continued to live even after gaining global recognition. Nobody was hurt in the fire.
Ali, who shot to international fame for her role in Danny Boyle's Oscar winning 2008 film "Slumdog Millionaire," said she lost most of her belongings including precious photographs taken during her trip to Los Angeles for the Oscar ceremony.
"We only have a few clothes left, we tried hard to salvage whatever we could before the fire spread. My pictures at the Oscars, all my memories, are all gone," Ali said as the rest of the family huddled under one blanket.
Wisps of smoke rose from the slum as Ali and her family rummaged through the ashes, trying to salvage their possessions.
Ali was 8-years-old when she played the role of the young Latika in Boyle's Oscar winning film, and her journey from the slum to the Oscar stage made international headlines.
Boyle had promised that he would provide both her and her co-star Azharuddin houses in Mumbai.
While Azharuddin moved into his new house in July 2009, Ali is due to move into an apartment within the next couple of months in Bandra, one of Mumbai's most expensive suburbs, and home many Bollywood stars.
"We have found a flat for them and they will move in in the next couple of months," Neerja Mattoo, a member of the "Jai Ho" trust, set up to look after the children's education and other needs said.
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