Chandramohan Manohar Sharma, better known as Charlie (Shah Rukh Khan), is a street fighter who has been yearning for revenge from Charan Grover (Jackie Shroff) for 8 years. Because of him, his father, Manohar Sharma (Anupam Kher) was labeled as a thief because Charan had conned him into stealing the Shalimar Diamonds priced at INR 300 crore ($50 million). Charlie finds out in the media that the diamonds will reach the Atlantis Palm hotel on Christmas Eve. He wants to steal the same diamonds and frame Grover. To accomplish this, he must assemble a dynamic team.
First in his team is Jagmohan Prakash, or Jag (Sonu Sood) who has a hearing deficiency and gets furious when anyone abuses his mother. Second on his team is Tehmton Irani, or Tammy, (Boman Irani) who is an overweight jogger and suffers from epileptic fits. It is also revealed that Tammy and Manohar were best friends. Third on the team is Rohan Singh (Vivaan Shah), a young hacker who will be able to hack Shalimar's computerized system. He is also Jag's nephew. After thoroughly researching about the vault, the team finds the main vault comprises a biometric lock (fingerprint lock). The problem is that only one person can access the vault at any time: Vicky Grover, Charan's son. So they enlist the aid of a lookalike, Nandu (Nandan) Bhide (Abhishek Bachchan). Charlie describe his team as ek full time bewda (Nandu), ek sanki jadeya (Tammy), ek bhari banduk sipahi (Jag), ek badmaash bachcha (Rohan).
The team heads to a warehouse which was originally their workshop for a rehearsal. It is revealed that Tammy was immensely in love with the Shalimar vault and he only knew the sole combination to the vault. The real Shalimar vault has a laser shield in front of the vault whose code combination is changed everyday. The team finds out a weakness that the Shalimar safe is in the Altantis hotel underground which is connected through an air duct system which is further connected to room 9C, a lounge room in Atlantis. Charlie then explains a problem, being that room 9c is booked for a team participating in the world dance championship (WDC), a dancing competition. The group refuses, but Charlie re-motivates the group, convincing them to become a dance team.
The real story is eventually revealed: Manohar was an engineer in vaults. He met Charan Grover, who was a dealer in African diamonds who gave him a contract to build an impenetrable vault. After the vault was completed, Charan drugged Manohar and conned him into stealing the diamonds by using his fingerprint. Desperate to win the competition, they employ many dance teachers, but to no avail. In desperation, Nandu introduces Charlie to Mohini Joshi (Deepika Padukone), who is a Marathi bar dancer. Although reluctant at first, Mohini decides to help them learn to dance, not knowing their true intentions. During this time, Charlie and Mohini grow very close.
They manage to qualify in the first round (by blackmailing the judges with evidence of their secret homosexual relationship) and eventually win the competition to represent Team India in the WDC (by having Rohan hack the machine that tallies the votes). Many people (including and especially Indians) despise them for their lack of dancing skill, but Charlie and his team (minus the oblivious Mohini) are all only concerned with the heist.
Upon entering Dubai, the other competitors are especially hostile towards Team India, especially Grover as he considers India as a team of losers. During the first round, they are pitted against Team Korea, however their performance is halted when Charlie saves a falling child of the rival team, instantly gaining respect and admiration from the audience the world over as well as the other teams (including the grateful Team Korea). After going over the plan, everything is ready. The team eventually find out that the diamonds will arrive on New Year's Eve instead of Christmas which impedes the heist. Though Team Korea secure the last position in the semifinals, the judges, moved by Charlie's saving of Korea's dancer and their spirit, decide that Team India will compete in the finals as a wild card addition. Over the course of the weeks leading up to the finals, the members of Team India become beloved celebrities in the eyes of the public.
Mohini ends up hearing the whole story as to why they wanted revenge, angrily confronting Charlie and his false motivations of the competition. Charlie reveals a shocking secret that Manohar is not in jail but is actually dead. After Manohar was arrested, he appealed for a trial, but Grover bribed Manohar's lawyers and tampered with the evidence. The next day, it was shown that Manohar committed suicide by slitting his wrists with a razor. Charlie kept this a secret from the other members in order to keep from demoralizing them. However, the team confides that this only makes their determination to avenge Manohar even stronger. Mohini reluctantly joins the team and helps them for the heist.
The night of the final round, the heist is set in motion. Mohini lures Vicky into an elevator, allowing a disguised Nandu and Jag to sedate him temporarily while Nandu takes his place. For the thumb print, Jag paints his thumb, removes it and places it on Nandu's thumb matching the print. While Tammy cracks the vault combination, he suffers an epileptic fit, however they open in time. Everything seems to go very well until Charlie and Tammy find another safe inside made of glass which houses the diamonds and Vicky wakes up. Tammy realizes that Manohar built this safe and Charlie manages to crack the password (which is "Charlie"wink.gif. After stealing the diamonds (and covering all of their tracks), the team boards a nearby boat, but Mohini doesn't want to come as she feels dedicated to protecting India's honor with the competition. Rohan eventually resolves to join her as well, leading to a fight amongst the other members over what they should do next.
Grover is horrified to find the diamonds stolen (with "Vicky's" opening of the door to the safe's room incriminating both him and Grover), but he soon pinpoints Team India as the thieves. When Team India is found missing, Grover claims that they must have left with the diamonds. As he watches Mohini perform, Jag, Tammy, Nandu and Rohan join in. During their performance, Charlie makes his unannounced appearance and eventually helps the team win the competition.
With any and all suspicions removed from the members of Team India, Grover and Vicky are arrested, Charlie revealing himself as Manohar's son just as they are both dragged out of the hotel by police. Team India reach the airport and manages to bypass security (Charlie camouflaged the diamonds as ice cubes in his cool drink), but the security guard disposes it. But during the flight Charlie reveals that he switched the fake diamonds on the trophy with real diamonds and the diamonds in the drink were fake so the diamonds on the trophy are the real Shalimar Diamonds.
The film ends with Mohini opening a dance school. Charlie proposes to her by giving a ring made of one of the diamonds.
