Late at night on a deserted road, well-known actor Armaan Kapoor (Vivan Bhatena) loses control of his car for no evident reason, apparently trying to avoid something, and drives into the sea. Inspector Surjan Shekhawat (Aamir Khan) with his assistant Devrath Kulkarni (Rajkummar Rao) begins an investigation into Armaan's death. Surjan's personal life is in turmoil since his 8-year-old son, Karan, drowned recently during a family outing. His wife, Roshni (Rani Mukerji), is still grieving and Surjan has developed a guilt complex.

Surjan learns that on the night of Armaan's accident, Armaan was travelling with 2 million rupees in cash, which is missing from the car. Armaan had given the money to a blackmailer, a pimp named Shashi (Subrat Dutta). Three years back, Shashi had performed a cover-up for Armaan and his friend Sanjay Kejriwal (Suhas Ahuja). Once he learns of Armaan's death, Shashi takes off with the cash, leaving behind a mistress, Mallika (Aditi Vasudev). Shashi's friend, Tehmur (Nawazuddin Siddiqui), steals Shashi's discarded sim card. Shashi begins blackmailing Sanjay. In panic, Sanjay employs some thugs to murder Shashi. Tehmur begins to use Shashi's old sim card to blackmail Sanjay with Shashi's murder.

Meanwhile, Roshni seeks solace from a medium (Shernaz Patel) who is in touch with Karan's soul. One night, Surjan is propositioned by an escort, Rosie (Kareena Kapoor). He declines Rosie's advances but asks her if she can become an informer. Through Rosie, Surjan finds out about Shashi's connection with the case. The police find Shashi's body, along with the blackmail money and a DVD. The DVD contains embarrassing CCTV footage of Armaan and his friends leaving a hotel with a girl. Convinced of Armaan's link with prostitutes, Surjan focuses his search on the slums near the Hotel Lido. To speak unobserved, Rosie takes Surjan to a quiet place by the riverside and tells him that three years ago, she was picked up by Armaan and his friends, Sanjay and Nikhil (Prashant Prakash). However, she doesn't reveal anything more. Surjan tries to approach Nikhil for more information but discovers that Nikhil has been brain-dead after the incident three years ago. After a heated argument with Roshni, Surjan confides in Rosie, who comforts him by taking him to the Lido.

Tehmur is killed by the two thugs in Sanjay's employ. One of the thugs is captured by the police and reveals that Sanjay has been behind the murders of both Shashi and Tehmur. Surjan arrests Sanjay, who confesses that three years ago, Sanjay, Armaan and Nikhil had picked up an escort to celebrate Nikhil's birthday. While driving, Nikhil began making out with the girl in the backseat. The car door opened by accident, throwing both Nikhil and the girl from the moving car to the road. Both were badly injured. Armaan and Sanjay rushed Nikhil to the hospital but fearing scandal, left the girl unattended on the road. Sanjay had called Shashi to ask him to take care of her. However, Shashi informed them that the girl had died and that he had footage of the three leaving with her. Since then, Shashi had continued to extort money from them by blackmail.

Surjan re-watches the footage and realizes that the girl is Rosie. As he drives Sanjay to the police station, they approach the same road where Armaan had his car accident. Both Surjan and Sanjay see Rosie standing ahead. In a re-enactment of Armaan's accident, Sanjay swerves the car into the river. With Sanjay already dead, Surjan struggles to get himself out of the car. Rosie appears underwater and saves him. At the police station, Surjan's superior advises him against reporting his incredible story. Surjan agrees to write in the official report that Armaan Kapoor's death was an accident. He returns to the riverside place where he used to meet Rosie and uncovers her remains where Shashi had hidden her body. Remembering that he had been told that "the dead come to those who are troubled," he gives her a proper funeral.

Now more accepting of the supernatural, Surjan finds a letter from Karan, penned by the medium. Through the letter, Karan tells Surjan not to blame himself for his death and that he wants both his parents to be happy. Surjan cries and Roshni consoles him. The two are reconciled.

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Farhan Qureshi (R. Madhavan) narrates the story of himself and his friends, Raju Rastogi (Sharman Joshi), and Ranchoddas "Rancho" Shamaldas Chanchad (Aamir Khan), students at the Imperial College of Engineering, one of the best colleges in India. Farhan wants to become a wildlife photographer, but is pursuing an engineering degree to fulfill his father's wish, whereas Raju needs to improve his family's financial situation, and Rancho studies for the pleasure of building machines. Rancho incurs the wrath of college's dean, Professor Viru Sahastrabuddhe a.k.a. 'Virus' (Boman Irani), by giving creative and unorthodox answers in class and living by the philosophy that one should pursue excellence not success as success will happen if excellence is achieved, and later blames the rote-learning mentality of the institution for the suicide of fellow student Joy Lobo. Virus's model student is Chatur Ramalingam, called "Silencer" for his silent but malodorous farts, (Omi Vaidya), whom Rancho humiliates by replacing praise with an obscenity in the speech memorized by Chatur for delivery before the college faculty and donors. Meanwhile, Rancho falls in love with Pia, in reply, tells Rancho of the exam, and he and Farhan steal the examination's questions for Raju who refuses to cheat as he has fully embraced Rancho view on life. Virus sentences them to expulsion; but then Pia angrily tells him he was possible for the death of their brother who had wanted to pursue literature and become a writer however under Virus is insistence he failed the ICE exam three times and committed suicide due to the pressure placed on him by his father who had considered his death an accident. The three then earn a reprieve when Viru's pregnant elder daughter Mona (Mona Singh) goes into labour at the same time. A heavy storm cuts electricity, and Pia who had left the house instructs Rancho to deliver the baby in the college common room via Voice over IP, after Rancho restores power using car batteries and a power inverter invented by Rancho. After the baby is apparently stillborn, Rancho resuscitates it by using his signature quote All is Well to which the baby responds and survives; therefore Virus allows them to take and pass their final exams. Rancho comes first and is awarded Virus's prize pen, retained hitherto for an especially-capable student.

Raju and Farhan then take Pia who was on the verge of marrying Suhas to Ladakh, where they see inventions resembling those of their friend. They reunite with him and when they ask him his real name, he identifies himself as Phunsukh Wangdu, Chatur's prospective business partner. Upon learning this, Chatur is horrified and begs Phunsukh to establish the business relationship as he had forced him to sign a declaration of defeat and attempted to humiliate him, apparently to no effect.