The small village of Ramgarh is home to ex-policeman Thakur Baldev Singh (Sanjeev Kumar). The film begins with Thakur summoning an old colleague and requesting him to track down a pair of small-time thieves he once apprehended in the line of duty. Though the two petty criminals Veeru (Dharmendra) and Jai (Amitabh Bachchan) are notorious, Thakur feels that they would be the ideal men to help him end the tyranny of Gabbar Singh (Amjad Khan), an infamous dacoit (bandit) wanted by the authorities for a Rs 50,000 reward. After scenes showing how the three fought together during a train robbery attempt, and how the criminals often get in and out of jail, Veeru and Jai are found and brought to Ramgarh. They are told by Thakur that they are to bring Gabbar to him alive for Rs 20,000, plus the Rs 50,000 reward.
Three of Gabbar's enforcers arrive in Ramgarh to collect supplies from the defenseless villagers, but they go back empty-handed due to Veeru and Jai's intervention. In Gabbar's camp, the tyrant interrogates the three about why they were defeated by only two men. His psychotic nature is shown when he subjects his men to a twisted version of Russian roulette, but eventually shoots the three men dead.
Gabbar attacks Ramgarh on Holi, and in a tough battle, Veeru and Jai meet their match and are held at gunpoint. With his two recruits facing death, Thakur has a chance to throw a gun to Veeru. Instead of helping, Thakur simply stands watching. With quick thinking, Veeru and Jai manage to save their lives. They then state their intentions to leave the villagers to defend themselves, due to Thakur's cowardice. Before they can leave, Thakur tells them the real reason of why he wants Gabbar, and why he could not help them. Some time ago, Thakur had caught Gabbar and had him imprisoned only for him to escape and plot an evil revenge. Gabbar made his way to Thakur's home and killed most of his family. The only person to survive this massacre was Thakur's younger daughter-in-law, Radha (Jaya Bhaduri). Thakur tracked down Gabbar, but this time the tyrant held the upper hand thanks to his gang, and cut off both of Thakur's arms. Thakur had hidden this disability from Veeru and Jai, but now it was clear why he could not physically help them.