The Movie story deals with Venkataratnam Naidu a young boy who lives with his younger half-brother, stepfather Naidu and mother in Kondaveedu which is a village in Guntur District. His stepfather is always partial towards his half-brother which constantly angers Venkataratnam. He starts to not care about what other people think about him and renames himself after "Gabbar Singh", a popular antagonist character from Sholay. His anger towards his brother and father grows and he runs away from home. His stepfather, Naidu catches him and joins him in a boarding school away from Kondaveedu.
21 years later, a scene shows a gang of robbers trying to steal money from a bank in Kondaveedu, when Gabbar Singh, now a cop, tries to recover the money by beating up the robbers. It is revealed that Gabbar Singh is now posted as a C.I. for the Kondaveedu region. His anger towards his brother and Naidu remains the same and lives separately from them. He wants to live with his mother in his new house, but she instead wants him to stay with her and Naidu.
Ajay is a gambling addict and has loans all over the village. Gabbar Singh falls in love with a handicraft vendor named Bhagya Lakshmi, whom he chances upon during a police raid that he conducts against gambling. It is revealed that the robbers who tried to steal are actually the henchmen of an upcoming politician named Siddhappa Naidu. He with the help of his uncle want to be a MLA of Kondaveedu. He meets Gabbar Singh and tries to appreciate him for catching the robbers. Gabbar Singh flatly refuses and tells Siddhappa that he actually knows who he is and tells him to behave himself.