Lagaan is set in late 19th century India. Captain Andrew Russell (Paul Blackthorne), the commanding officer of a British cantonment, oppresses the people of Champaner with high taxes (lagaan). The local ruler, Rajah Pooran Singh (Kulbhushan Kharbanda), asks that taxes be lowered to ease the suffering of the drought-stricken villagers. Captain Russell humiliates the Rajah by asking him to eat meat if he wishes the taxes to be lowered. The Rajah, a vegetarian by religion, says that he must keep the rules of his religion and his caste; he cannot eat meat. Captain Russell then doubles the taxes.
The peasants, who are already suffering from a prolonged drought, are devastated by this news. The monsoon is late; they will be unable to pay regular taxes, much less double taxes. They beg the Rajah to help them, but he says he cannot persuade the British to mercy.
The villagers, returning from their fruitless audience with the rajah, stop to watch the British officers playing cricket. Bhuvan gets into a fight with a British officer who behaves badly with one of the villagers. In the process, he also mocks the game, calling it "easy" and not much different from gilli-danda, a local game that is mostly played by children.
Captain Russell notices them and sees the young, impetuous Bhuvan (Aamir Khan), who has previously angered him by interfering during his game hunting expeditions and shooing off the wildlife so that they would not be shot. The captain offers to cancel the taxes of the whole province for three years if the villagers can beat his men at cricket. If they lose, they will owe triple tax. To the horror of the other villagers, Bhuvan accepts this wager on their behalf. Later, he explains that as they can pay neither double nor triple taxes, they should grab the chance for a tax remission.
Bhuvan (Aamir Khan) raises his voice against the oppressive taxation.Nonetheless, the villagers of Champaner, and of all the neighboring villages, are furious with Bhuvan. No one has ever played cricket. How can complete novices beat the British?
Upon learning of Captain Russell’s wager, his superiors in the British Army admonish him for his arrogant and irresponsible behavior. They tell him that if he loses the match, he will have to reimburse all the taxes from his own pocket and moreover suffer a transfer to East Africa.
Led by the courageous Bhuvan and helped by Russell’s good-hearted sister Elizabeth (Rachel Shelley), a few villagers begin to learn cricket. As time progresses, more and more villagers are convinced to join Bhuvan's team. The villagers have eccentric self-styled techniques—Goli swings his arms many times before releasing the ball, while Bhura, the chicken farmer, organises fielding training for the other villagers by having them attempt to catch his hens.
As they spend time together, Elizabeth falls in love with Bhuvan, who is himself attached to a charming local girl, Gauri (Gracy Singh). Though Bhuvan feels nothing but respect for Elizabeth and Elizabeth never expresses her feelings, Gauri sees how matters stand and is anxious until Bhuvan declares his love. This infuriates the woodcutter Lakha, who had hoped to win Gauri himself.
Bhuvan (Aamir Khan) with an eclectic mix of the village-folk forming their cricket team.Lakha decides to humble Bhuvan by forcing him to lose the match. Lakha joins the team, but secretly meets with Captain Russell, informing him of everything that is happening. The captain tries to prevent his sister from helping the villagers, but she defies him.
In the end, Bhuvan has only ten players, one less than the eleven needed for a cricket team. Bhuvan finds his final player by chance, after the village cripple and untouchable Kachra inadvertently demonstrates his ability to bowl leg spin while returning the ball to the players. However, the village head and other members of the team threaten to quit the team, refusing to play with an untouchable. Bhuvan responds with an impassioned speech in front of the village, chastising everyone for their discrimination, after which they agree to allow Kachra to take his place in the team.
On the first day of the match, large numbers of villagers, many from outlying areas, have come to watch the eagerly awaited match. Members of the British leadership in India are also present, and the match is umpired by two Britons based in Kanpur (spelled Cawnpore before 194 cool .
Captain Russell wins the toss and elects to bat. The British officers make a strong start, and put on more than fifty runs before Lieutenant Smith, Captain Russell's deputy, is run out by Bhura after a mix-up. Goli then quickly follows up by bowling out one of the British officers, who are unable to pick up his multiple swing bowling action and repeatedly miss the ball. Captain Russell then attempts to convince the umpires to ban Goli's bowling because of the multiple swinging of the arm, but Elizabeth runs onto the field and points out there is nothing in the laws of cricket that prohibits this, much to her brother's chagrin. However, Captain Russell detects that Goli grunts immediately before releasing the ball, allowing the officers to detect his deliveries. After that, Russell and his partner easily dispatch his bowling.
Bhuvan brings on his trump card, Kachra, who has been spinning his leg break significantly during practice. However, Kachra's spin deserts him and he concedes a lot of runs. During the first day, Lakha, the Indians' best fielder, deliberately drops many catches and at the end of play, the British batsmen are in a strong position. That night, Elizabeth sees Lakha travelling to the British camp to meet her brother and she informs Bhuvan. The villagers attempt to kill Lakha on the spot but Bhuvan offers Lakha one last chance.
The next day, the British continue to play with ease against the Indians, and are only three wickets with almost 300 runs, at the lunch break, with Russell confidently predicting to his superiors that they will reach 600. However, Lakha takes a diving one-handed catch which sparks the British batting collapse. Kachra is brought back to bowl, and rediscovers his ability to spin the ball and takes a hat trick, bowling one of the officers around his legs with a leg break that spun more than a metre. Captain Russell reaches his century before being dismissed by Bhuvan, who gives him a send-off. The eccentric village mystic, Guran, gets in on the act. After one batsman repeatedly charges many meters out of the crease to hit his balls, he deliberately bowls a full toss way over the batsman's head, with the wicket keeper Ishwar (who is Gauri's father) stumping the batsman. The officers are bowled out after losing their last seven wickets for less than fifty runs.
The Indians start the run chase strongly, with Bhuvan and Deva Singh Sodhi, a former Sikh sepoy, opening the batting and put on seventy-odd runs. However, a straight drive from Bhuvan deflects off the hands of Lieutenant Smith, the bowler, onto the stumps, with Deva backing up too far and being run out. The Indians then lose a sequence of quick wickets. When Lakha comes into bat, Russell orders his fastest bowler Yardley to knock Lakha's head off. Yardley then bowls a beamer which hits Lakha directly in the temple. Lakha is concussed and falls onto the stumps and is given out hit wicket anyway. Guran briefly launches a counter-attack which his unusual repertoire of shots, while engaging in sledging against the bowlers. Eventually he is dismissed and the team suffers another injury when Ishmail is forced to retire hurt after being struck on the foot by a yorker. At the end of the day's play, more than half the team is out and the team has scored less than half of the required runs.
The final day starts well for the Indians, with Bhuvan and the wicket keeper Ishwar batting steadily. However, not-so-young Ishwar begins to tire, and is run out after trying to run for an extra run. Bhuvan blames himself for pushing Ishwar's fitness too hard. Ismail returns to the crease after the umpires allow the village boy Tipu to act as a runner. Bhuvan passes his century and Ismail his fifty as the Indians seize control of the match. However, Smith has another trick up his sleeve and as he is about to bowl to Bhuvan, he stops. The unsuspecting Tipu continues walking out of his crease and is run out. Then Bhura comes for batting, he could not run so fast that was required . Bhuvan convinces him to be on strike,he will make the runs.Russel then by his cleverness brings Bhura on strike by kicking the single run ball for a four-run.Then Bhura comes for strike ,he hits the ball for a single but due to his mistake Bhuvan falls apart& the Brits get an opportunity for an runout.Bhura does a sacrifice by making himself runout. Then he tells Bhuvan that now its all up to him.The score is now 311/9.
As a result, the match turns again, with runs still needed, and the last batsman to enter the crease is Kachra, whose disability means he cannot hold the bat properly. However, the English bowlers repeatedly miss the stumps while Bhuvan continues to score. The match comes down to the last over.In the first ball Bhuvan hits four runs that makes the Brits alarming .In the next ball,Bhuvan is struck on the head with a bouncer Refusing the medical aid provided to him, Bhuvan hits a single& now Kachra is on strike. Kachra finds difficult to hit two balls out of three balls & now he needs to strike a six out of playing arena from the last ball of the match. With his disability, he can only knock the ball a short distance and the Indians manage only a single. Bhuvan and the Indian camp are distraught, while the British are jubilant. Nobody however, has heard the umpire signal no ball. Thus, Yardley has bowl the last ball again. Bhuvan swings extremely hard with a pull shot, that goes very high up into the air off a top edge. Captain Russell backpedals at long on, and the ball finally descends into his hands after an eternity and Bhuvan is caught. He then turns around to the British officials sitting under the marquee, and roars in celebration, while the whole stadium is still silent, yet to comprehend what has happened. The British contingent are unimpressed by Russell's antics, and when he looks down at his feet, he finally realises that he has backpedalled too far and was beyond the boundary of the playing area when he caught the ball. Bhuvan's shot has scored six runs, securing a one wicket win for the Indians. The crowd then spontaneously erupts and invades the field, chairing Bhuvan off the field. Suddenly, dark clouds form out of a hitherto cloudless sky, and the drought breaks.
After the match, the British high command orders that the cantonment at Champaner be disbanded in humiliation at losing to the Indians. The narrator closes the story by reporting that Russell was forced to pay the taxes for the whole province from his own pocket and was transferred to East Africa paying those villages 3-year tax. The narrator adds that Elizabeth returned to London, and remained unmarried for the rest of her life, remembering Bhuvan, who marries Gauri.
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