Raj Malhotra and Simran Singh (Shahrukh Khan and Kajol respectively) are young first generation British Indians brought up and living in London. Raj is the only child of wealthy widower Dharamvir Malhotra (Anupam Kher), who spoils his son excessively. Raj is a free-wheeling party boy, who is the first student at his tertiary institution to fail. Simran is the elder daughter of petrol station/convenience store owner Chaudhry Baldev Singh (Amrish Puri), a very socially conservative Punjabi Indian man whose only dream is to one day go back to his native Punjab. One day Raj tricks Baldev into selling him some beer after closing time by feigning an urgent need for headache medicine, making him very angry. Baldev angrily denounces Raj as a disgrace to Indians. Baldev is proud that he has managed to raise his daughters in a traditional way. Simran constantly dreams of her Prince Charming, a stranger who comes into her life and sweeps her off her feet, and writes about him in her diary. Her mother "Lajo" (Farida Jalal) tells her not to get her hopes up.
One day a letter comes from Ajit (Satish Shah), Baldev's best friend in India, saying that his son, Kuljeet (Parmeet Sethi), and Baldev's daughter, Simran, should marry each other, in accordance with a promise the two fathers had made to each other when their children were infants. Simran agrees to marry him out of respect for her father, but before the wedding, she begs her father to allow her to go on a trip to Europe with her female friends; her last chance to see the world before her marriage to a complete stranger and relocation to India. Even though he is very strict, Baldev relents and permits her to go, on the condition that she promises never to betray his trust. He allows Simran to go as she has always respected and obeyed him.
During the trip, Simran meets Raj, who is on the same Eurorail package tour with some of his friends. After some initial misadventures, mainly due to disrespectful and raucous behaviour on the part of Raj, he falls in love with Simran. Only after sometime at their moment of parting at the railway station in London does Simran realize that she too has fallen in love with Raj.