Allari Ramudu is an Family drama based movie in which, Chamundeswari (Nagma) is an industrial baron. She is a headstrong lady who loves money and neglects human relations. She dominates her husband (Naresh) completely. Rama Krishna (NTR) joins Chamundeswari's house as a servant. Se has a beautiful daughter named Mythili (Aarti) who is kind hearted and cares for poor people. In the process, Ramu wins the heart of Mythili. But, she is loved by a son of a minister (Vizag Prasad).
Mythili falls in love with Ramu after looking at his innocence and loyalty. One day, Mythili dares to jump from a temple cliff when Ramu refuses her love. Ramu promises her that he would marry her to avoid that situation. Meanwhile, Chamundeswari get angry with Ramu for being in love with her daughter and summons her father Pasupathi (Jayaprakh) and her five brothers to help her. When they arrive to warn Ramu, we also see another old man (K Viswanath) entering the scene as the grandfather of Ramu. And it is revealed that Ramu and Mythili are related to each other.
Ramu has a sister-in-law called Rukhmini (Gajala), who is head on heels over Ramu. Mythily and Ramu love is two-sided. Rukhmini's love is one sided. Rest of the story is about how all ends well.