Is Mohanlal one of the best living actors in the world?

Yes, he is one of the best living actors in the world. He is one of the greatest (if not the best) Indian actors of all time.

Why I say Mohanlal, is because of the fact that he literally lives his characters on screen. His acting is natural, not forced and while I respect and admire the great actors that are Kamal Haasan and Mammootty, they are below Lal in the acting department. Amitabh is a charismatic force to be reckoned with on-screen, but I don't think he is as versatile and good an actor as the other three.

What's so astounding about Mohanlal is how he even changes his body language (along with his expressions and voice) effortlessly to match the mood. He does not have Greek-god looks, he is not lean and mean, and he does not have a heavenly or powerful voice. He is average-looking, fat (not very fat, but say, a bit more than healthy), and has a very ordinary voice. Yet he is the most loved actor in Kerala purely for his near-godly acting capabilities. And he can play comic roles with the same equal ease that he plays serious roles.

Watch some of his classics like Kireedam, Devasuram, Spadikam, Bharatham, Thanmathra, Nadodikattu, Pattanapravesham, Varavelpu, Kilukkam, Mithunam, Thoovanathumbikal, Chithram, Iruvar (Tamil)and Vanaprastham.

If you are someone who doesn't understand Malayalam, Ram Gopal Varma's Company (2002) is more than enough to show why he is regarded as such a great actor.