The rugby great passed away late last night in hospital, rugby.com.au confirms.
Shehadie, the husband of former NSW governor Dame Marie Bashir, played 30 Tests 1947 and 1958, and over 100 games for Australia.
After retiring from football, Shehadie served as Lord Mayor of Sydney from 1973 to 1975.
He was one of only two Wallabies to ever be knighted.
Former Prime Minister Tony Abbott tweeted, "Sir Nicholas Shehadie improved everything he was involved with. He improved rugby as Wallaby captain, improved our city as Lord Mayor and even managed to improve SBS as its chairman. He radiated warmth and was perfectly at home in a boardroom or a bar."
He continued, "He will be much missed by the Sunday morning walkers at Balmoral where he was a fixture until quite recently. My deepest condolences to Dame Marie who has lost a wonderful partner."