Shree 420 is the tale of a country boy, Raj (Raj Kapoor), from Allahabad, who travels to the big city, Bombay, by walking, to earn a living. He falls in love with the poor but virtuous Vidya (Nargis), but is soon seduced by the riches of a freewheeling and unethical lifestyle presented to him by an unscrupulous and dishonest businessman, Seth Sonachand Dharmaanand (Nemo) and the sultry temptress Maya (Nadira). He eventually becomes a confidence trickster, or "420," who even cheats in card gambling. Vidya tried hard to make Raj a good man but fails.
Meanwhile, Sonachand comes up with another scheme to exploit poor people, whereby he promises permanent homes to them at just Rs.100. The scheme pays off, as people start hoarding money for a home, even at the cost of other important things. Vidya's contempt for Raj increases even more. Raj becomes wealthy, but soon realizes that he paid a very high price for it. When Raj discovers that Sonachand has no plans to fulfill his promises, he decides to make wrongs right.
Raj takes all the bond papers of the people's homes & tries to flee Sonachand's home, only to be caught by Sonachand & his cronies. In a scuffle that occurs, Sonachand shoots Raj dead. When people hear the shooting, they come & see Raj dead. Sonachand tells police that Raj was trying to flee after stealing money from his safe, hence Sonachand shot him.
Upon this, the "dead" Raj springs back to life & using pure logic, proves Sonachand's guilt. Sonachand & his partner's are arrested, while Vidya happily forgives Raj. The film ends with Raj telling that 'yeh 420 nahi; Shree 420 hain'("These are not just con men, they are con men in garb of respected men").