Lootera is inspired by O. Henry’s The Last Leaf. In the picturesque town of Manikpur, West Bengal in 1953, a landlord (Barun Chanda) goes to watch a jatra with his daughter, Pakhi Roy Chaudhary (Sonakshi Sinha), an aspiring writer. After Pakhi has an asthma attack from the ensuing excitement, she is rushed to her room and given medication. As she recuperates, her father comforts her and narrates the story of the invincible king of the Bhil tribe whose soul resided inside a parrot, telling her that she is the parrot within whom his life resides.
One day, after threatening the family driver into letting her drive the family car, Pakhi accidentally bumps into a motorcycle on the road, mildly injuring the handsome young man on the motorcycle. A few days later, the same man shows up at the door, introducing himself to the landlord as Varun Shrivastav (Ranveer Singh), an archaeologist who wants to study the land surrounding the temple that the landlord owns. Over the next few weeks, Varun charms the landlord and his daughter with his knowledge and persona, and is invited, along with his assistant and friend Dev (Vikrant Massey), to live at their expansive mansion.
Soon, love brews between Varun and Pakhi as they bond over art and literature. Pakhi confesses her aspirations of becoming a writer, while Varun reveals his desire to paint a masterpiece. Their love soon culminates into a passionate affair. Meanwhile, an act passed by the Indian government debars the power of landlords, causing tension in the Ray Chaudhary household. The ancient artefacts the family owns must be sold, and Varun helps arrange the purchases.
As Varun’s stay comes to an end, he asks Ray Chaudhury for his daughter Pakhi’s hand in marriage, and preparations of their wedding begin. Before the wedding, Varun’s uncle A.K. Bajpai (Arif Zakaria), who raised him, arrives and discourages Varun from marriage, stating that Varun will only give Pakhi grief because of the danger of what he actually does for a living—people like them are not meant to fall in love and have normal lives. Varun is conflicted but agrees and makes his choice: he and Dev flee that very night, along with all the valuables they stole from the landlord. On the wedding day, Varun is nowhere to be found, and it is discovered that the idols from the temple have been stolen and the currency notes from the purchase that Varun arranged of the family’s artifacts are all counterfeit.
A year later, a sick Pakhi is living all alone in Dalhousie. Except for her maid Shyama (Divya Dutta), she has no company. Her father has died, unable to bear the shock of betrayal by Varun, and she has still not recovered from her heartbreak. When police Inspector K.N. Singh (Adil Hussain) asks her to help him nab Varun, she refuses to do so, wanting only to forget him. Soon after, Varun and Dev turn up at Dalhousie for their next heist and stay at a lodge on Pakhi’s property. Things turn ugly when the police gets wind of their whereabouts and a chase ensues. Varun accidentally kills Dev and a constable, and is injured in the encounter. He removes the bullet and then goes to seek refuge in Pakhi’s house.
Pakhi and her maid try to turn him over to the police, but he threatens them. Pakhi gives in, but she is nevertheless enraged and repels Varun’s comforting advances and explanation. In a letter, she explains to him that she is dying of tuberculosis and will die the day the last leaf falls from the wilting tree outside the window. Her maid leaves the house promising Varun that he wouldn’t be reported to the police.
Varun plans his escape but when his accomplice comes, he refuses to go, and instead stays behind to take care of the ailing Pakhi. He tells her his real name, Atmanand Tripathi, and confesses that he has regretted letting her go since the day he fled. Soon, Pakhi warms up to him and her faith remains intact when each day she finds one last leaf remaining on the tree.
In the end, seeing Pakhi’s condition improving, Varun decides its time for him to leave, and he takes off, only to come face to face with a police blockade on the road, who proceed to shoot and kill him. Pakhi wakes up to find Varun gone, but the tree still has a leaf on it. She becomes suspicious and discovers that the leaf has been affixed to the tree by Varun. Every night, he would tie it on a branch of the tree so that she wouldn’t give up hope. It was his masterpiece. Pakhi realizes the truth after she looks at the leaf closely and sees that it’s been painted upon, and smiles with tears in her eyes.