Ajay Sharma, (Shahrukh Khan), is a man who seeks revenge. His father, Vishwanath Sharma (Anant Mahadevan), once owner of a great business empire, was defrauded by Madan Chopra (Dalip Tahil), a trusted employee in Vishwanath's company. The Sharma family is ousted from their own company and loses everything they owned. Soon afterwards, Ajay's father and his young baby sister die due to illness, unable to buy medicine because of their destitute state. His mother (Rakhee) is now suffering from mental illness and memory loss. All this drives Ajay to revenge. He wants to kill the man who did this injustice to him and bring the same fate upon his family. And to do this, he will go to any length.
Ajay begins dating Seema Chopra (Shilpa Shetty), the daughter of the owner of Chopra business empire. They meet secretly as her father would not approve of a poor son-in-law. Meanwhile, the younger daughter Priya Chopra (Kajol) travels with her father Madan Chopra to Madras (now Chennai), for Madan's final kart race before he retires permanently. Madan has never lost before, but comes across Vicky Malhotra (Ajay Sharma in a disguise of brown contact lenses). Vicky allows Madan to win by slowing at the last corner and tells him that he couldn't beat his "guru". Vicky then charms Priya by saying that he lost the race as he couldn't break the heart of a beautiful girl. Thus his ploy of winning in spite of losing (meaning Baazigar) succeeds as he wins Priya's heart. This way, he manages to date both Seema and Priya simultaneously using different identities.
Ajay is (incidentally) photographed lurking outside the birthday party of Seema by one of her friends. Later Madan Chopra arranges for Seema to be married off to another business family. Seema is heartbroken, and Ajay decides that they will write identical suicide notes and commit suicide. After they each write their suicide notes, he tells her that the suicide note was just a test. He says that only cowards commit suicide and destroys his note, while keeping Seema's. They decide to marry secretly the next day. When they arrive, the registrar is closed, so they go up to the roof of the building for sightseeing. He makes her sit on the parapet and tells her the truth about himself, after which he throws her to her death from the rooftop of the building. He then posts the suicide note and leaves, but arrives later (as Vicky) with Priya. He helps the Chopra family with the funeral. The letter written by Seema implies that she has committed suicide, and the murder investigation is closed. Priya cannot believe that, and asks her father to re-open the case. However, he disagrees, saying he doesn't want to lose his reputation due to Seema's affair. Priya then asks Karan (Siddharth), who is her former classmate and a current police inspector, for help.
Priya tries to investigate Seema's death, however her attempts prove unsuccessful. Ravi, Seema's college friend, offers to help her, but is brutally killed by Vicky. As Vicky forces him to sign a suicide note before hanging him, Karan thinks that Ravi must have been in love with Seema and hence her murderer. Later, Priya and Vicky meet Seema's college friend, Anjali, who becomes suspicious of him. When she finds out that he was Seema's boyfriend back in college, she calls the Sharma household during Vicky's and Priya's engagement party. Vicky intercepts the phone and impersonates Chopra, and then arrives at her place. He strangles her, then fits her body in a suitcase and throws it in the river.
Vicky vows to destroy Madan Chopra, confiscate his assets and throw him out of his office and onto the street, just like Chopra did many years ago to Ajay's father. Chopra needs to go on a business trip, and knowing that Vicky's his soon to be son-in-law, gives Vicky the Power of Attorney. Vicky does a carbon copy of the previous montage of Chopra, and within days seizes everything. One day in a club Vicky takes Priya to calm her mind, where they meet Ajay's childhood friend, who greets him as Ajay. While Vicky tries to ignore him, Priya tells the man that he is mistaken, and that Ajay is Vicky Malhotra. Ajay's friend repeatedly tries to remind Vicky (who is actually Ajay) about their friendship. Vicky feels trapped and tries to get out of the mess by abusing him and gets in a scuffle with him. Priya visits Ajay's friend and the whole truth is revealed to her.
When Chopra returns, Vicky reveals himself as Vishwanath Sharma's son Ajay and gives him the exact sendoff that Chopra did 15?20 years ago. Priya finds Ajay's home address, and finds out his real identity. Ajay comes in and they argue about Seema's murder. Ajay wins her over by telling her the past history of their two families. Madan charges in with a group of thugs and shoots Ajay in the shoulder before he is severely beaten and wounded. Ajay's Mother is then knocked unconscious trying to defend Ajay. This prompts him to recover and fight Madan and his gang all alone. Chopra eventually picks up a stake and mortally stabs Ajay. However, Ajay manages to impale him with the same stake by walking into him and laughing sadistically and they jump off a small cliff. Chopra dies, and Ajay manages to stagger back to his mother telling her that he has reclaimed what is rightfully hers. Mrs. Sharma is cured of her illness, but is beset by sorrow as Ajay dies in her arms.