Chulbul Pandey, a young boy, lives with his younger half-brother, Makhanchan "Makkhi" Pandey, stepfather Prajapati Pandey (Vinod Khanna) and mother, Naina Devi (Dimple Kapadia) in Laalgunj, Uttar Pradesh. His stepfather is always partial towards Makkhi which constantly angers Chulbul. He harbours a feeling of resentment and indifference towards his stepfather.
21 years later, a scene shows a gang of robbers trying to steal money from a bank, when Chulbul (Salman Khan), now a cop, tries to recover the money by beating up the robbers. It becomes clear later that he keeps the money for himself. Chulbul, who calls himself "Robin Hood" Pandey, lives with his family and does not have a good relationship with his stepfather and Makkhi. Makkhi (Arbaaz Khan) is in love with a girl called Nirmala (Mahi Gill), whose father Masterji (Tinu Anand) opposes the relationship. Chulbul falls in love with a girl named Rajjo (Sonakshi Sinha), whom he chances upon during a police encounter.
An evil political leader by the name of Chhedi Singh (Sonu Sood) meets Chulbul and tells him that the people he beat up and stole the money from are party workers and that they were getting money for the party. But he offers to forgive Chulbul on the condition that Chulbul start working for him. Chulbul flatly refuses.
Makkhi asks his father to arrange his marriage with Nirmala. His father refuses saying that he needs money to repay the loans he took to make his factory, so he needs his son to marry a rich girl. Makkhi, in desperate need of money, steals it from Chulbul's cupboard and is caught red-handed by his mother. He tells her that he intends to give the money to Nirmala's father, who in turn will return the money after marriage through dowry. Although his mother refuses, he reluctantly takes the money and gives it to Nirmala's father.
Meanwhile, Chulbul meets Rajo and proposes marriage. She rejects it saying that she has to look after her father, Haria (Mahesh Manjrekar), who is always drunk and she cannot marry while he is alive. Chulbul then comes home to find his mother dead. He goes to his stepfather to make peace, as he is the only family left. His stepfather rejects and despises him as an outcast. Chulbul is then attacked at the railway station by Chedi's men, when he is with Rajo and her father; he beats up all of them in a fight. He sees Makkhi buying new clothes at the market. On approaching him, Makkhi says that he is getting married to Nirmala and invites Chulbul to the marriage. Chulbul tries to convince Rajo's father to give his daughter's hand in marriage to him and to stop drinking. Rajo's father accepts and, after Chulbul leaves, he plunges into a lake and commits suicide, as he knows that his daughter will not marry anyone while he is alive. Chulbul takes Rajo to Makkhi's exuberant wedding. Realizing that Makkhi has stolen his brother's money to finance the wedding,Chulbul marries Rajo in an informal ceremony. Nirmala's father, Masterji, feels disgraced and cancels the wedding.
Makkhi beats up one of the workers in his factory due to an accident. The workers go to the police station with his mother to file a complaint. Instead Chulbul beats up Makkhi in public, thus disgracing him. Chedi Singh decides to take advantage of the situation and suspend Chulbul. He takes Makkhi and his father to the police station. But Makkhi's father resolves the situation by accepting an apology from Chulbul. Chulbul meets Dayal Babu (Anupam Kher), the leader of Lok Manch, who also dislikes Chedi Singh. They come to an agreement to keep Chedi Singh in control. Chulbul adulterates the breweries of Chedi Singh due to which some people fall ill and Chedi Singh is blamed. Chedi Singh is confronted by Chulbul who openly reveals that he spoiled the breweries.
To take revenge, Chedi Singh burns Makkhi's factory. Makkhi's father has a heart attack due to shock and is hospitalized. Makkhi, in desperate need of money for his father's treatment agrees to do anything for Chedi Singh, without realizing that it was Chedi Singh who burnt his factory. Chedi Singh orders him to deliver a crate of mangoes to Dayal Babu's house. But, unknown to Makkhi, there is a bomb in it. After he leaves the house, it explodes, killing Dayal Babu. Chedi Singh gives Makkhi a task to kill Chulbul. Makkhi, knowing that he would not do it, accepts it and meets Chulbul. He confesses to Chulbul that he was sent to kill him by Chedi Singh. He reveals to Chulbul that Chedi Singh made him plant the bomb unknowingly. Chulbul forgives him and reconciles with his stepfather. Makkhi meets Chedi Singh, who thinks that Makkhi killed Chulbul and reveals to Makkhi that he had killed Makkhi's mother. Chedi Singh is then informed that Chulbul is arriving with a huge police force. Makkhi reveals to Chedi Singh that he did not kill Chulbul. In a final battle, Chulbul arrives and takes down all the goons and rescues Makkhi. He then defeats Chedi Singh in a fight and suffocates him to death after Makkhi reveals to him that Chedi Singh killed their mother. In a happy ending, Chulbul gets Makkhi married to Nirmala in the presence of their father, while Rajo reveals that she is pregnant.