Baabul tells the story of a wealthy and progressive businessman Balraj Kapoor (Amitabh). He and his wife Shobhana (Hema Malini) have a son Avinash (Salman). After many years of studying abroad, Avinash announces his return to home.

Soon Malvika 'Milli' Talwar (Rani) enters his life. Love blossoms between them and they get married and are soon blessed with a son, Ansh. Tragedy strikes the family when Avinash is killed in an accident. The loss is too much for Milli and she slowly falls into depression.

Balraj seeks to bring happiness back into Milli's life and he gets in touch with Rajat (John). Rajat was Milli's friend and he secretly loved her but never told her.

Balraj asks Rajat to marry Milli but he faces opposition from his orthodox elder brother Balwant (Om Puri). Will Balraj succeed in uniting Rajat and Milli?

Director Ravi Chopra hopes to recreate the success of "Baghban" in 2003, which starred Amitabh, Hema and Salman. The film, based on ill treatment of elderly by their own children, was an unexpected hit.