Barbara (Babe) Cushing Paley, 63, for many years an international pace-setter in the most elegant circles of fashion and society, died of cancer yesterday at her home in New York City.

She was the wife of William S. Paley, chairman of the board of CBS Inc.

A tall, willowy brunette, blessed with beauty and wealth, Mrs. Paley has an unerring sense of good taste. For years she had made the best-dressed list. By 1953, she was declared the best Dressed woman in the World in a poll taken by the New York Dress Institute.

Six years later, Mrs. Paley was elected to the Fashion Hall of Fame. And in 1975, the Hall of Fame gave her a special citation. "Superdresser of our Time." She dressed without ostentation or obvious extravagance.

"She was always perfection. Even if she wore jeans, a sweater and loafters, she made everyone around her look like slobs," an associated said.

Mrs. Paley once was called an "arbiter of style by instinct and by nature." In 1969, she was among the recipients of the first annual citation of the National Society of Interior Designers for inspiring good design.

She had been active in many philanthropies. She was an honorary trustee of the North Shore University Hospital of Manhasset, Long Island, where she and her husband had maintained a home for many years.

She was a trustee of the Museum of Broadcasting, the William S. Paley Foundation and the Greenpark Foundation, which operates Paley Park in Manhattan. She also was a member of the board of governors of the Human Resources Center, a rehabilitation and educational facility for the handicapped in Albertson, Long Island.

Mrs. Paley was born in Brookline, Mass., the youngest of three daughters of the late Dr. Harvey W. Cushing a noted Boston neurosurgeon. She and her sisters, Betsy and Mary, were known for their beauty and their brilliant marriages.

She attended Westover School in Middlebury, Conn. Before her marriage to Paley in 1947, she was a fashion editor for Vogue magazine. Her first marriage, to Stanley G. Mortimer, an advertising executive, ended in divorce in 1946.

In addition to her husband, she is survived by four children, William Cushing Paley, of Washington, Kate Cushing Paley, of New York, Stanley G. Mortimer III and Amanda Mortimer Burden, both of New York; two stepchildren, Jeffrey Paley and Mrs. J. Frederic Byers III. both of New York; her sister, Mrs. John Hay Whitney, of Manhasset, and Mrs. James E. Fosburgh, of New York; a brother, Henry K. Cushing, of Boston, and four grandchildren.