At a very young age, a Muslim-Gujarati guy from Fatehpur, Raees(Shahrukh Khan) gets involved in the trade of illegal liquor and drug trade. Raees and his friend Sadiq (Mohammed Zeeshan Ayyub), work for a disreputable gangster Jairaj (Atul Kulkarni) and bribes the police to smuggle alcohol behind the desk. Though he is a smuggler, he lives by the philosophy, as taught by his mother that every occupation is good, and no religion is greater than any occupation till it does not cause any harm to anyone. He decides to part ways with Jairaj to operate on an individual level.
He meets Musabhai( Narendra Jha) and Nawab (JaideepAhlawat) in Mumbai, and with their help starts his bootlegging business. Meanwhile, an honest police officer IPS Jaideep Ambalal Majmudar (Nawazuddin Siddiqui), wants to end this illegal liquor trade. Raees is in love with Aasiya (Mahira Khan) and she accepts the proposal to marry him and the two soon get married. Majmudar gets transferred to Fatehpur, and starts a major crackdown on alcohol dealers. All the dealers decide to collaborate except Raees. Majmudarcontinues to gather evidence about Raees, and Raees consistently finds ways to avert him and continue with his trade. Due to his differences with Raees, Jairaj tries to get Raees killed. Musa informs Raees about Jairaj’s attempt and Raees survives by killing Jairaj and his associates at a bar, thus his philosophy gets broken. Majmudar gets transferred from Fatehpur to Kutch. Gujarat's Chief Minister and Pashabhai (UdayTikekar) dealing with politics support Raees for liquor and money. With his money, intelligence and tact, Raees won over the administration. He also assists his community by offering employment to women to sew cloth bags, which he uses to smuggle alcohol and get them delivered to homes. In the meantime, Aasiya delivers a baby boy. Raees is offered a project by the Chief Minister to eliminate the illegal occupants at a land and construct a housing project.
Still a hindrance to Raees's business, Raees manages to get Majmudar transferred to control room department, where he thinks he won’t be able to impact his business at all. However, tables turn with Majmudar's transfer as he starts listening in to Raees's telephonic conversations and get updates of all his moves.Pashabhai plans a march to end illicit liquor trade, as a part of his election campaign, which would pass through Raees'sarea. Raees assaults him during the march. The CM advises Raees to go to jail for a while for his act but assures he would get all the facilities and carry on his trade from there. While still locked up, the CM and Pasha form an alliance, that could potentially wipe out Raees’s whole business. To counter them, Raees decides to fight the election from the jail and wins it. Raees visits the location of the housing project with his wife and paints a picture of tall houses, where children would fly kites from rooftops; an English medium school where children would speak fluent English; a hospital in Raees’s mother’s name.
He dreams that there would be abundance in the air of that locality, where there would be no poverty or hunger; where every morning would be Eid and each night a Diwali. He reaches out to people to invest in his, project by offering them homes, where they can pay in instalments. Meanwhile, Majmudar gets transferred back to Fatehpur as SP – Crime. Communal riots break out in the state. People start running out of food. Raees dispatches free food to four localities in the city, which takes a heavy economic toll on Raees. Considering Raees a threat, the CM puts his housing project in the green zone. The construction of the project comes to a halt, as it is banned by the government. Raees suddenly finds himself broke with all his money dwindled on the housing project, elections and dispatching food supplies. Musa offers to help Raees by offering him money for an assignment to smuggle gold from Doha. Raees returns the money of all his investors in the housing project.
News breaks that there have been five serial bomb blasts in north India, killing several people. Police investigations led to Raees, to the gold that he smuggled, and its discovered that it contained RDX that he was unaware about.Raees is morally devastated by this shock. Majmudar wants to arrest Raees but considers he might escape due to the corrupt system. Raees kills Musa for betraying his trust and killing innocent people to incite communal riots. Majmudar orders his officers to shoot Raees at sight, but Raees brings press with him and surrenders and is well aware Majmudar would kill him. And as expected, Majmudar kills Raees by shooting him in an isolated place. During the time he was getting shot, Raees remembers his complete past in a fast flashback and finally, he dies in front of Majumdar.