Returning the award allowed her to be a part of a political movement started by writers and filmmakers, Ms Roy said.
More than 100 writers and other public figures have returned awards over what they call rising intolerance in India.
It follows a series of recent incidents, including the killings of scholars, writers and rationalists.
Bollywood star Shah Rukh Khan has also spoken out against "extreme intolerance" in India.
Ms Roy was among 24 filmmakers to give back their awards on Thursday.
As they did so, Muslims in the north-eastern state of Manipur staged a general strike to protest against the lynching of a Muslim man by a Hindu crowd on Monday.
They had accused him of trying to steal a cow.  It was the third such mob killing within six weeks.
While returning their national and state awards, scientists, historians and filmmakers have cited the killing of rationalists MM Kalburgi and Govind Pansare, as well as the lynching of a man over suspicions he consumed beef, as examples of rising intolerance in India.
On Thursday, Ms Roy, who had won the national award in 1989 for writing the screenplay of a film joined the growing list.
In a piece published in The Indian Express newspaper, Ms Roy, 55, explained why she was returning the award.
"It allows me to be a part of a political movement initiated by writers, filmmakers and academics in this country who have risen up against a kind of ideological viciousness and an assault on our collective IQ that will tear us apart and bury us very deep if we do not stand up to it now," she wrote.
She said the current movement was "unprecedented and does not have a historical parallel".
"I am so proud to be part of it. And so ashamed of what is going on in this country today," she added.
Ms Roy's comments have generated a large response on Twitter with many praising her for her courage:
Some, however, have also criticised the author:
Booker Prize-winning Indian author Arundhati Roy says she is returning a national award over recent "horrific murders" in the country.