A four-member team of officials began questioning the actress at Abkari Bhavan, the office of Prohibition and Excise Department, around 10 am.
Ms Khan is the eight person from the Telugu film industry to appear before the SIT. The SIT has summoned 12 persons from the film industry, including directors and actors, for questioning in the case.
She was being questioned on whether she takes drugs and whether she has any links with Calvin Mascrenhas, the alleged kingpin of the racket.
Ms Khan reached Hyderabad from Mumbai after she got permission to leave 'Big Boss', a television reality show, for one day. According to the rules of the television show, no participant is allowed to leave the house till he or she is eliminated from the contest.
The actress, who had a cameo in the movie Munna Bhai MBBS, is the eighth Tollywood celebrity to be questioned by SIT. She is considered close to director Puri Jagannadh, who was already quizzed in the case.
The investigating officers had on Wednesday grilled actress Charmme Kaur for over six hours in connection with the case.
The Hyderabad High Court had on Tuesday rejected her plea that she should be questioned in the presence of her lawyer. The high court, however, directed the SIT to question her in the presence of women officers between 10 am and 5 pm.
During the investigation of the drug racket that was busted here on July 2, names of some members of the Telugu film industry cropped up, the SIT had said earlier.
So far, it has questioned art director Dharma Rao alias Chinna, filmmaker Puri Jagannadh, cinematographer Shyam K Naidu and actors P Subba Raju, Tarun Kumar and P Navdeep.
Nineteen people have been arrested so far and seven cases registered.
The SIT suspects that the racketeers supplied high-end 'party drugs' such as lysergic acid diethylamide (LSD) and methylenedioxy-methamphetamine (MDMA, also known as ecstasy) to film personalities, employees of Multi-National Companies and school and college students in the city, among others.
Mike Kamminga's arrest was being considered a major breakthrough as he was reportedly supplying the drugs to peddlers from Europe.