Raj Kumar Saxena (Raj Kapoor) comes to Bombay armed with Honesty. Integrity and his Degree along with a whole of dreams and aspirations of making it in this city of opportunities. Raj was to find out that his values and beliefs had no worth in a city like Bombay where the social system allowed profiteers, black-marketers, and other species of "420's" to make fortunes.

In the course of drifting from one job to another Raj meets the beautiful Vidya (Nargis). Though very poor herself, this school teacher shared Raj's philosophy on life and they start to share their dreams. Raj soon learns that their dreams are impossible to achieve honestly - and so, economic need and bitter experiences drive this simple and honest man to dishonesty and evil.

Shree 420 tells the story of Raj's perilous journey into the high flying society, where no price is too much to pay for success - a life of high stake gambling and drinking - a life which drifts him further and further from his values, beliefs and Vidya.