Mayavi movie is all about Mahi (Mammootty) who is a regular jailbird. He is also a master at the art of fighting invisibly. When he cannot afford to appear in front of his enemies, he makes his moves so suddenly, so swiftly and so intelligently that his opponents don't even get a chance to see him. This style of fighting has earned for him the nickname 'Mayavi'.
In jail he has a friend, Balan (Manoj K Jayan) who is more like a brother to him. Balan has three months to go to get released, but there is an emergency situation at home. His brother Satheesh (Manikuttan) who is in hospital due to a very serious ailment and requires to be operated upon. That requires a big sum of money. He hopes to get released on Independence Day, when every year a prisoner is set free. Even Mahi desires that. But the lucky one who gets released is Mahi.
Thottappilly Surendran (Vijaya Raghavan) who is all set to murder Aranimuttam Sivasankaran (Saikumar) who has gone to jail after murdering his (Surendran's) father. Mahi happens to see a young girl, Indu ( Gopika) who is a manager-cum-accountant and a dependent of the Aranimuttam family. What happens subsequently compels Mahi to don the mantle of Mayavi again.