Baba film opens with the birth of Baba (Rajinikanth), who is a 'baba amsa sambhootudu'. Baba grows up as an atheist, hot-blooded guy and a Good Samaritan. His life style includes consuming alcohol, smoking beedi, chewing paan parag, His mother (Sujatha) and his maternal uncle are ardent devotees of Baba (the Baba who is supposed to be of 2000 years old and who live in Himalayas). Chamundeswari (Manisha Koirala) stays in the neighborhood of Baba and both of them fall in love.
Baba beats the son of a state minister Krishna Murthy (Ashish Vidyarthi). Krishna Murthy demolishes the colony of Baba. When Baba is about to go to fight with Krishna Murthy, Baba's mother urges him to maintain calm and rebuild lost colony it by working hard. Baba joins as a labor in a shop and earns money. Chamundeswari tells Baba that she is not willing to marry a daily labor. Then Baba realizes that so far he has been only answerable for his mother. And if he gets married then he has to live for wife and kids. And he would become answerable to them. He would not be able to help for the society as he might become selfish after marriage. He feels that prema (love) is maya (illusion). At that time, a weird looking sadhu comes to him and tell him that its time for getting enlightened. Baba is taken to Himalayas where he meets the real Baba. He gets frightened by the atmosphere and wishes to return back to Chennai. Then real Baba grants 7 wishes to Baba. He can use any of these wishes anytime he wishes to utilize. Baba is sent back to Chennai. Baba still could not believe that he went to Himalayas met real Baba. He uses that mantra to test the power by wishing a flying kite to come and fall in his hand. He waits for a few seconds and decide that it was all his illusion. Later the kite follows him to his house and falls on his hand. He feels that its coincidental and tries the mantra again to a different kite and wishes it to fall on his lap. He goes into his house and close all the possible entries in the house. But the kite makes its way falls on his lap. That is where he realizes that Baba is real and God exists in the world. He still has five more wishes life. And the minister Krishna Murthy comes to know about it. They call a tantrik (Amrish Puri) to foil Baba's magic powers.
Baba spends 3 more wishes for trivial things. The sixth wish is used to revive a patient fighting for his life. Krishna Murthy wants to become the chief minister of the state using Baba's boons. He also tries to kill Baba but this attempt fails due to the blessings of Babaji. The final wish is then used to install an unselfish chief minister for the state. Once his wishes are used up, Baba has the choice of living with Babaji at the Himalayas or returning back to life in the material world. But when Baba is just about to ascend to the Himalayas, the villains kill the loyal chief minister. Baba turns back and the film ends with the tag "To be continued...." .