Weighing only 1.26kg (2.6lb), the Kalamsat-V2 was made by students belonging to a space education firm.
It will help ham radio operators and "inspire schoolchildren to become the scientists and engineers of the future", India's space agency says.
The Indian Space Research Organisation (Isro) launched the satellite from its Sriharikota space centre.
Isro chief K Sivan has claimed that "Kalamsat is the lightest satellite to be ever built and launched into orbit".
It is also the first to be built by a private Indian firm and launched by Isro.
The celestial unit will serve as a communications satellite for ham radio transmission, a form of wireless communication used by amateurs for non-commercial activities.
An even lighter satellite, weighing 64 grams and built by the same group of students, was launched on a four-hour mission for a sub-orbital flight from a Nasa facility in the US in June 2017. Sub-orbital spaceflights technically enter space, but do not get into orbit.
Kalamsat-V2 was made by students belonging to Space Kidz India, a Chennai-based space education firm.
Srimathy Kesan, chief executive of Space Kidz India, told Indian broadcaster NDTV that the satellite took just six days to make, at a cost of 1.2m Indian rupees ($16,887).