Set in present-day Varanasi, Uttar Pradesh, India, the plot of Masaan follows two seemingly separate stories that converge eventually.

The first of these tells the story of college student Devi Pathak (Richa Chadda). The film opens with her and her fellow student, Piyush Aggarwal, checking into a hotel room. They are interrupted during sex when policemen burst in, having been tipped off by hotel staff who suspected Devi and Piyush were indulging in “indecent behavior”. Inspector Mishra (Bhagwan Tiwari) records the barely clad Devi on his mobile phone while Piyush locks himself in the bathroom and commits suicide by slitting his wrists. Devi and her father Vidyadhar (Sanjay Mishra) are subjected to blackmail by Inspector Mishra, who demands a hefty bribe of three lakhs to hush up the matter. In desperate need of money, Vidyadhar begins to indulge in a betting game, where people bet on small boys to dive and collect the maximum number of coins from the Ganges riverbed within a specified time. He lets people bet on Jhonta (Nikhil Sahni), an orphan, that works for him after Jhonta volunteers himself for the game. Meanwhile, Devi has to switch jobs due to the stigma associated with her having pre-marital sex. She eventually gets a government job in the railways in Varanasi, but news regarding her pre-marital sexual indulgence reaches there as well.

The second narrative concerns Deepak Kumar (Vicky Kaushal), a Varanasi boy from the Dom community (low castes, forced to work in "dirty" jobs due to the caste system) whose family works in cremation ghats by burning funeral pyres. Deepak wants to transcend the restrictions of a casteist society. He studies civil engineering at a polytechnic college where he meets and falls in love with Shaalu Gupta (Shweta Tripathi), a high caste Hindu girl. They start meeting each other and during a trip to Allahabad on the banks of the Ganges, they share an intimate moment. Back in Varanasi, Deepak tells her about his caste and the work he does burning corpses. Shaalu remains firm and tells him that she will be with him even if her parents refuse. She asks him to focus on his placements and get a job, while she reaffirms her commitment to him.

However, unfortunately, during a pilgrimage trip with her family, Shaalu dies in a ghastly bus accident. Her body with those of other victims ends up at the same cremation ground where Deepak's family works. Deepak is shattered on seeing her dead body and loses all purpose in his life. He retains her ring as a souvenir. Deepak is eventually able to overcome his grief and discards Shaalu's ring in the Ganges. He gains a placement as a civil engineer in Allahabad. Later that same ring is picked up by Jhonta who loses consciousness underwater while collecting coins. He regains consciousness in hospital and gives the ring to a remorseful Vidyadhar, who decides to stop playing with Jhonta's life. He sells the ring and is finally able to pay off Inspector Mishra.

Marred by the parochial mindset of people regarding her situation, Devi leaves Varanasi and joins a course in Allahabad. She comes to the banks of the Ganges to immerse the gift Piyush had given to her on that fateful day in the hotel. Deepak, who was also sitting by the bank, notices her crying and offers her water to drink. A boatman beckons, offering both of them a ride towards Sangam. They both board the boat and strike up a conversation.