"A routine check was conducted this morning (Tuesday morning) under jail Superintendent Rajalakshmi and officials recovered the mobile phone from Nalini," Director General (Prisons) ADGP KR Shyamsunder said.
He said that the cell phone was active at the time it was recovered, adding that the authorities are checking the call records.
Action will be taken against her according to the "violation of prison rules" after further investigation, he said.
Recently, Nalini, who is serving a life term, had approached the Madras High Court seeking premature release.
On Apr 6, her appeal was turned down by a division bench of the Madras High court on the ground that the offence was committed by her in a cunning and meticulous manner, which led to the killing of the former Prime Minister in Sriperumbudur in Tamil Nadu on May 21, 1991.