Dr. Vaseegaran (Rajinikanth), a professor specialized in robotics, creates a sophisticated android robot based on his own likeness. His mother (Revathi Sankaran) suggests him to name it Chitti Babu (Rajinikanth).
In a robotics conference, Vaseegaran introduces Chitti to the audience, who are left stunned by its versatile skills and speed. Vaseegaran's mentor, Dr. Bohra (Danny Denzongpa), unsuccessfully tries to gain knowledge of Chitti's image schema. Later it's revealed that Bohra himself has been occupied in a botched research to create a superintelligent android robot. Bohra's experiments turn only partially fruitful and he becomes jealous of Vaseegaran's success.
Chitti endears himself to Vaseegaran's girlfriend, Sana (Aishwarya Rai) and helps her cheat in her medical school exams by using his ZigBee protocol to dictate her the answers from outside the examination hall. Chitti and Sana are caught, but Sana tells the invigilators that she doesn't even know him. Chitti learns that humans may lie in self defence. Chitti's superhuman talents soon gains him a lot of fans, especially in the women's hostel housing Sana and interestingly Sana herself likes Chitti more after she was saved from the goons in the train.
Vaseegaran prepares Chitti for a panel evaluation by the Artificial Intelligence Research and Development Institute (AIRD), which is headed by Dr. Bohra. The panel enquires whether Chitti's build confirms to the Three Laws of Robotics of Isaac Asimov. Vaseegaran replies in the negative. During evaluation, Chitti almost stabs Vaseegaran at Bohra's command. Bohra convinces the evaluation committee that Chitti could not be relied upon in the battlefield because he could be easily made to turn against his owners. Vaseegaran is disappointed as Chitti fails the evaluation. Later, Chitti tries to rescue a girl from a building fire emergency. Indifferent to the girl's nudity, Chitti carries her into the public and media focus. As she tries to run away from the TV cameras, she is fatally run over by a truck.
Vaseegaran decides to modify Chitti's image schema to allow him to understand human psyche, behaviour and emotions, and succeeds in doing so by installing a new hormone simulation module into the robot. Later Chitti successfully applies his knowledge in ancient and modern medical sciences to handle the complicated labour of Latha (Devadarshini), Sana's friend. The procedure is covered live by the media. Dr. Bohra arrives to congratulate Dr.Vaseegaran on the achievement. He also lets Chitti pass the AIRD's evaluation. But problems have only begun for Vaseegaran. Chitti begins to develop tender feelings for Sana. This causes a confrontation between Vaseegaran and Chitti at Sana's birthday party. Sana tries to explain Chitti that she can love him only as a friend and asks him to forget her. Dr. Bohra tries to take advantage of the situation and tells Chitti that Vaseegaran is using him only for his personal benefits, and that he does not value Chitti's feelings. Dr Bohra's words do have their effect on Chitti; he deliberately fails in an evaluation conducted by the Indian Army. Vaseegaran, in a fit of rage, chops Chitti into pieces and throws it away in a landfill site.
Bohra, who had already struck up a deal with a European terrorist group through an Indian agent named Shah (Sabu Cyril) to sell them superintelligent robots, had failed to meet the deadline and is given an ultimatum by the group's leader. He retrieves Chitti's parts from the junkyard and fixes it up. He gives Chitti a new appearance, and installs a "red chip" inside Chitti, thereby converting him into a ruthless terminator with a positronic brain. Chitti interrupts Vaseegaran and Sana's wedding and kidnaps her. Calling himself "Chitti Version 2.0" now, Chitti begins to create more robots that look like him. Dr. Bohra, who tries to interrupt, is killed by Chitti. Soon Chitti's army of robots cause mayhem in the city, and take over AIRD. Vaseegaran undertakes the responsibility to stop Chitti. Disguised as one of the robots, he successfully infiltrates Chitti's fort -- the AIRD headquarters. Vaseegaran instructs the police to cut the power supply in the entire city and Sana distracts Chitti from the problem by pretending that she had finally fallen in love with him. Eventually, when Chitti and his army are about to run out of power, they find an alternate solution: they seize vehicles on the road and use their batteries to recharge themselves up.
Chitti finds out Vaseegaran, but as Chitti is about to kill him, the police force strikes the fort. The robots assemble themselves into a sphere, snake, tower, and many other formations to defend themselves. One of the robots get immobilized by a grenade explosion, and is taken into custody by Vaseegaran. He uploads a computer worm into Chitti's network which temporarily brings down the robot army. Chitti identifies the source of the worm and sends a "self-destruct" command to the robot. Eventually, the robots assemble in the shape of a giant and chase Vaseegaran's armoured bus. Vaseegaran used the data he had backed up from the destroyed robot to de-magnetise the robot army, which results in the collapse of the giant formation. Chitti is pulled into the bus by a huge magnetic wall. Vaseegaran now has access to Chitti's internal control panel, through which he instructs all the other robots to self-destruct. He then removes the red chip, thereby calming him down.
In a final court hearing, the judge rules capital punishment for Vaseegaran for the number of human tolls caused by the robot army. Chitti, explaining to the court that the law allows him to be treated as a valid evidence, explains that it was Dr. Bohra who caused Chitti's deviant behaviour. He shows the court, using his eyes as 3D projectors, the video footage of Dr. Bohra installing the red chip inside him. The court decides to drop all charges against Vaseegaran, while concluding that Chitti should be dismantled in order to avoid further mishaps of the same kind in future. The court also observes that a robot as advanced as Chitti is "unnecessary for contemporary human life". Back at the lab, in the presence of government and police officials, an emotional Vaseegaran tells Chitti to dismantle itself. While taking off its parts one by one, Chitti apologizes to Sana and Vaseegaran for the problems it caused.
Twenty years later, in 2030, students in a science museum are escorted by a guide towards a showcase that has Chitti's body parts arranged. The guide tells the students that Chitti was the most advanced humanoid robot that was created twenty years ago and that it was dismantled due to "certain reasons". A curious girl (Shriya Sharma) asks why, to which Chitti's head responds saying, "I started to think". As the guide takes the students to another exhibit, the girl looks back at Chitti in disbelief.