Devasuram movie is all about Neelakantan (Mohanlal) who is the heir to the well known Mangalasherry family who squanders away his father's largesse and good name, but is loved by the people who knows him well. Neelakantan was the arch rival of Shekaran of the Mundakkal family right form the childhood days. During a minor ruckus, one of the aides of Neelakantan accidentally kills Shekaran' uncle (Janardanan). This incites Shekaran and he plans to avenge the death of his uncle.
Meanwhile Neelakantan offends Bhanumathi (Revathi), a dance graduate, by forcing her to dance in front of him in his house. In retaliation Bhanumathi quits dancing and curses Neelakantan that she will dance again only after his death. Later he feels regretful and helps her family in many ways and tries to persuade Bhanumathi to take up dancing again, but she doesn't budge. Meantime, Neelakantan visits his widowed mother intending to bring her back home, but she passes away after revealing a terrible secret; that he was born out of wedlock. This fact crushes him, and only Bhanumati finds out this secret when he curses drunkenly that the ancestral heritage which he is proud of, is actually not his. She is surprised by the vulnerable side of Neelakantan.
He tempts Banumathi again, only to be refused like before.The night on which he was returning home from Bhanumathi's home, Shekaran and his aides ambushes(by hitting him with a car from behind) and therefore him and injures him seriously after also inflicting wound with several swords and wooden sticks.
Neelakantan survives the attack, but his left hand and leg are badly injured and for cure he undergoes some ayurvedic treatment to rejuvente his legs. It is during this time that Bhanumathi falls in love with him (she is also regretful for having cursed him, feeling a bit guilty that the attack was somehow related to her curse).
Neelakantan convinces Bhanumathi to dance and he arranges for a dance event for her at Delhi. Neelan refuses to marry Bhanumathi considering her future, but in the end she and Warrier (his right hand man) persuade him to do so. Neelakantan tries to forget all the past events and his rivalry with Shekaran, but Shekaran is not satisfied and wants to defeat Neelakantan in front of the whole village. For this he kidnaps Bhanumathi and forces Neelakantan to take blows in front of the public during a village festival organised by the Mundakkal family. Meanwhile Neelakantan's friends rescue Bhanumathi and after this Neelakantan mauls Shekaran badly and cuts off Shekaran's right hand, claiming "Shekeran, I want to live peacefully..." so that he will not again come up with revenge later.