Aapathbandhavudu is a Family drama based movie in which, Madhava (Chiranjeevi), is a loyal friend, servant, and cowherd to Hema (Meenakshi Seshadri) and her father (Jandhyala).
He also stars in dramas, in which he plays Lord Shiva. Hema's father is a school teacher and is a great poet, but since his classical poetry is no longer popular, he cannot find a publisher to print his poems.
Even though both, Hema and Madhava love each other deep down in their hearts, both of them do not realize this due to societal divisions of not only caste but being of different economic classes as well. But, Hema is the first to realize her love during a drama where she portrays the role of Lord Shiva's consort, but suppresses her feelings owing to societal divisions.
One day, in order to pay for Lalitha(Geetha)'s wedding (Hema's elder sister), Madhava sells his cows and gives the money to a family friend to give to Hema's father as a loan. When her father hears what he has done, he gifts Madhava with his manuscripts.
Madhava goes to town to have them printed. When he returns, he sees Hema being taken away by an insane asylum van. He learns that Hema has gone into shock after her brother-in-law tried to rape her and in the process killed her sister(Geetha) who tried to prevent him.
Madhava pretends to be crazy and enters the asylum, where he goes through many hardships in order to save her. He, after stopping a guard from attacking her, is falsely accused of attempted rape and is electrocuted. He tries many times to help her regain her memory. When she finally does and realizes what he did for her, she wants to marry him after she is safely rescued.
However, Madhava objects due to his being of a lower strata of society. But Hema's fiancée (Sarath Babu) convinces him and Madhava finally agrees.