Swapnahalliyil Orunaal movie tells Aswathy (Vishnupriya) who is born to the first wife of a rich Thampuraan (‘Lord’). Aswathy’s father (Narendra Prasad) marries a second time because he wants motherly love and care to be given to his daughter. But the stepmother Malini (Priyadarshini) has ulterior motives. She brings in her lover Mahendra Varma (Krishna Kumar) too, with some definite plans.

In the meantime, Aswathy develops a liking for young Kannan, the son of an elephant-tender. When things became unbearable, Aswathy and Kannan run away to Swapnahally, a dream like place. And then happen certain unexpected things.