Rangoon Story based on 1943 the Second World War when India w as fighting along with the British. Subash Chandra Bose founded Indian National Army to fight his battle. Jemadar Nawab Malik (Shahid Kapoor) a part of small group of soldiers who fighting with the Japanese on Indo- Burma border are cornered trying to escape and captured as prisoners of war.
Meanwhile top officials were desperate to meet with the finances to replace ammunition take help from India's leading film star Julia (Kangana Ranaut) stage dancer and a pro forma to entertain civilians and Armed Forces. Zulfi (Saharsh Shukla) the manager and trusted helper looked after her career. Rustom Billimoria (Safi Ali Khan) a film producer and a former Indian action star, who lost his hand in doing a stunt for a movie, is now Julia mentor and owns a production house of Julia's movies.
Billimoria is friendly with the British commander Major General David Harding(Richard Mac be) who encounter a encrusted royal sword belonging to a Maharaj (Sunder Pal) at a gathering posted by Billimoria, seeing the commanders endeavour to get the sword from maharaja . Maharaj plans to send the sword to INA to help them fight British out of India. Opportunity arises when Harding wants to send Julia and Billimoria who are now in relationship to entertain his soldiers at the border. They object to this but Harding promise top security. On boarding the train Jemadar Malik who had escaped as a prisoner of war, was assigned the security for Julia. Crossing the river the compartment was attacked by the Japanese soldiers resulting in number of casualties.
The British assumed that Julia had fallen in the river but she and Mallik survived and but were captivated by three Japanese soldiers. Malik killed two and captivated one who helps them to reach India. During their travel through rain forest take shelter in anti aircraft bunker, where in hard ships the get to like each other.
On reaching India Julia gets engaged to Billimoria. Harding desire that they both are dispatched to the border area under aircraft gun protection, where Julia has to do a stage show for which Billimoria does not agree but is forced by Julia to let her do the show. This behaviour of Julia makes Billimoria feels that Malik and Julia have a relationship, as before the stage performance Billimoria find them in passionate position and tries to kill Malik. Meanwhile Zulfi who has survived and is a spy for INA is entrusted to take the sword to INA, it is then revealed that Malik did not escape from Rangoon but was helped by INA who enlightened him about British rule in India. Zulfi who is been deployed by Malik to stand outside Julia tent to protect her gets a chance to give threat to British on the radio for which he is attacked by major Wilson and others. Zulfi is killed and he is doesn't get a respectful burial.
Malik and Mema arranged to transfer the sword to INA but sadly Mema is caught and threatened by the British commander forces her to disclose the other person who helped her or he would kill her son. Malik disclosing his identity sings the INA anthem. Harding gives William signal to kill Mema horrifying to see this Malik attacks William and is captured. Julia is disturbed and helps Malik to complete his mission of delivering the sword to INA. On the bridge where the sword has to be handed over they are cornered by British. Malik convinces her to cross the bridge as he is seriously injured. Billimoria arrives with British troops to rescue Julia but Harding orders for the bridge to be blown up causing injuries to Julia Billimoria asks her last wish who appeals that the task should be fulfilled. Billimoria kills all the British troops and hands over the sword to INA and latter raise the Indian Flag in 1944.