The film, set amid the fetid alleys of Mumbai's notorious slums, continued its surprise run of success since it swept four categories at the Golden Globes, including the prize for best drama.
The movie got the second highest number of Oscar nominations Thursday, including best director for Danny Boyle, best picture and - generating the most buzz in India - three music nominations for Indian composer A.R. Rahman.
A front-page headline in the Times of India trumpeted "RAH RAH RAHMAN" while a parade of Bollywood stars attending the Thursday night premiere in Mumbai rejoiced that the celebrated songwriter was earning international accolades.
"I'm at the top of the world," Rahman told the Times of India. "Everything is a blur."
Rahman has long been a national star thanks to his work on a string of Bollywood blockbusters.
"His music transcends," said Rohit Bhatia, a 33-year-old fashion designer in New Delhi. "It's like listening to Beethoven."
"Slumdog Millionaire" tells the story of Jamal Malik, a poor youth who becomes the champion of India's "Who Wants to Be a Millionaire" television program as he searches for his lost love.
The gritty movie, which features prostitution, religious violence and maimed beggars, has sparked great debate over whether it strikes a blow to India's international reputation.
About two dozen slum residents protested the film Thursday outside the Mumbai home of Anil Kapoor, one of the film's stars, saying the title of the movie was an insult.
The Times of India's film critic told moviegoers to forget "the twitter about aggrieved national sentiment."
Calling it "a piece of riveting cinema," the paper praised the movie as "a Cinderella-like fairy tale with the edge of a thriller and the vision of an artist."
The movie was being released both in English and in Hindi and many predicted it would be a monster hit.
"I am very excited for this movie because I am also from a slum," Mohammed Hamid, 19, said outside a New Delhi movie theater. "I want to meet Danny (Boyle) and star in 'Slumdog 2."'
Cast members could hardly believe their success.
"Never before has a film from (India) been accepted like this and embraced in the West, and you know, been awarded with these sorts of accolades," Dev Patel, the young star of the film told The Associated Press by phone from the Mumbai premiere.
"This is the best - you can't get better than an Oscar. And just to be nominated. I think everyone's just really proud about this film," said Patel who was with Boyle when they learned of the nominations.
The film was also nominated for best adapted screenplay, cinematography, sound mixing, sound editing and film editing.
Associated Press writers Sam Dolnick in New Delhi and Erin Carlson in New York contributed to this report.
By Erika Kinetz