The film begins where its predecessor ended, with reigning don Shoaib Khan (Akshay Kumar) earning respect after assassinating his mentor, Sultan Mirza (Ajay Devgn). Twelve years later he is still a charismatic, suave womaniser, who has extended his empire to the Mideast. Khan's only friends are Javed (Sarfaraz Khan) (who oversees his illegal work), his former love Mumtaz (Sonali Bendre), and Aslam (Imran Khan), a teenager Khan met during a visit to the slums in which he grew up.
An older Khan returns to Bombay to kill Rawal (Mahesh Manjrekar), who opposed his ambition to take the reins in Bombay. Although the city was his first love, rising starlet Jasmine (Sonakshi Sinha) wins his heart. Khan advances Jasmine's career by rigging awards, and showers her with gifts; she becomes obsessed with him. He sends Aslam and another trustworthy aide, Jimmy, to kill Rawal. Jimmy fails, accidentally killing his girlfriend, Sonia, and flees. He is soon captured by the police, hot on Khan's trail after learning about his arrival in Bombay. Jimmy, loyal to Khan, does not crack during his interrogation and is freed due to lack of evidence. The police intend to draw Khan out from hiding; he has eluded them for twelve years, and this is their last chance to take him on Indian soil.
Khan, suspicious that Jimmy has become a police informer, decides to kill him but Aslam offers to do the deed to deflect police attention. He, Dedh Tang and several thugs masquerade as rival biker gangs and stage a brawl. Plainclothes police officers try to control the chaos when Aslam corners Jimmy. When a police officer stops Aslam, Khan appears out of nowhere, murders Jimmy and injures the policeman. A chase ensues; the police fail to catch the two, who escape in Khan's Mercedes.
Although Khan has bought Jasmine a house, she rejects his advances. Angry and disappointed, Khan slaps her and tells her to leave the house. Still unsuccessful in wooing her, he interrupts her film shoots. Before Aslam can tell Jasmine he loves her she interrupts him, saying that her family has already arranged her marriage. To avenge Khan, Rawal shoots Jasmine when Aslam drops her off at her home. After Aslam rushes her to the hospital, Khan tells Jasmine that they both love her. Although Aslam denies this, Khan asks him to pretend so Rawal can use Aslam as a pawn against him.
When Rawal calls Aslam at the hospital, Aslam reveals Khan's hideout after Rawal convinces him about his friend's true nature. Khan, lying in wait with a sniper rifle, kills Rawal and his henchmen when they arrive. Khan, his power enhanced, savours his victory and evades capture from the police by leaving the country. However, upon learning of Aslam's affection for Jasmine from Dedh Tang, he angrily kills Dedh Tang and arrives in Dongri to confront Aslam. Khan sends his aide Akbar to kill Aslam. Aslam, though injured kills Akbar. Aslam now waits for Khan to kill him. Aslam does not defend himself against Khan's blows and hits. Inspector Sawant appears, and fires at Khan. Aslam pushes Khan away, taking the bullet himself. Jasmine verbally insults Khan as man who has everything but nothing. A gun battle injures Khan and Sawant in which the latter is killed, and Javed drags Khan away. In the last scene, a bullet-ridden, dejected Khan reads a letter he was unable to give Jasmine in the cargo hold of a ship.