Om Prakash Makhija, a junior artist in 1970s Hindi cinema, is in love with film superstar Shantipriya. One evening, Om attends the premiere of Shanti’s film, and envisions himself as the lead actor, Manoj Kumar. Om and his friend Pappu take on numerous small acting roles as extras, and one night, a drunk Om describes his fantasy of one day winning a Filmfare Award for Best Actor. At the shooting of a film, Om rescues Shanti after a fire grows out of control, and they become friends. Om tries to romance her.
Om overhears a conversation between Shanti and film producer Mukesh Mehra. The pair have recently married in secret, and Shanti reveals that she is pregnant with his child. Mukesh seems overjoyed and asks Shanti to meet him at the set of their upcoming film Om Shanti Om. Mukesh promises to cancel the film, reveal their marriage to the public, and have a grand wedding on the set. However, revealing his true colours, he tells Shanti that their relationship and child will ruin his career and sets the backdrop on fire.
Om attempts to rescue Shanti, but is attacked by Mukesh’s guards. After the guards leave, he again attempts to rescue Shanti, but he is thrown from the building by the explosion. A disorientated Om is hit by a car owned by Rajesh Kapoor, an actor taking his pregnant wife, Lovely, to the hospital. At the hospital, Om remembers his moments with Shanti as he dies, while Lovely gives birth to a son, also named Om. The soul of Om Prakash reincarnates into the newborn Om Kapoor.
Years later, Om Kapoor (nicknamed OK) becomes a famous actor and lives the luxurious life dreamt of by Om Prakash, but experiences pyrophobia and subconsciously inherits Om Prakash’s memories. At an awards ceremony, OK unknowingly delivers a speech Om Prakash made when he was drunk, which is heard by Pappu on television. At the event, OK’s father introduces him to Mukesh, whose introduction causes OK to fully remember the events of Om Prakash’s life. OK later reunites with Om Prakash’s mother Bela and Pappu, and conspires to avenge Shanti’s death by making Mukesh confess his crime.
OK convinces Mukesh to restart shooting for Om Shanti Om, and he plans to convince Mukesh that Shanti’s spirit is haunting him. To impersonate Shanti, OK finds a super-fan Sandhya (Sandy), a doppelgänger of Shanti. Throughout the film’s shooting, OK and his friends arrange incidents to remind Mukesh of the past. During the music launch of the film, OK taunts Mukesh by revealing the extent to which he knows the story of Shanti’s death. But when Mukesh runs after Sandy thinking she is the ghost of Shanti, Sandy accidentally cuts her arm and bleeds. Seeing this, Mukesh realises that she is not Shanti’s ghost. Mukesh tries to confront OK, but he is suddenly hit by the set’s swinging chandelier.
After Mukesh regains consciousness, OK confronts him but Mukesh reveals that he knows Sandy is not a ghost after all. During the quarrel, Sandy reappears and taunts Mukesh. She reveals that after the fire ceased to burn, Mukesh found that Shanti had survived and buried her alive below the chandelier. OK is confused about how Sandy knows this detail. Mukesh attempts to shoot Sandy, shocked by the revelation about the murder, but Mukesh and OK fight, which results in yet another fire. Just when O.K is about to kill Mukesh, Sandy stops him, saying Mukesh will not die by his hand. The chandelier falls on Mukesh, killing him instantly.
Pappu and Sandy rush to join OK, who is shocked when he sees Sandy in two places at once. OK realises that the person he assumed to be Sandy was actually Shanti’s ghost, and recalls instances where supernatural events helped when OK’s plans almost did not work, realising that Shanti was responsible. She smiles warmly towards OK and tearfully bids him goodbye, disappearing as she moves into the light.