With splashes of humour, this modern twist to a classic tale opens with the family of archeologist Arun Chatterjee, who lives with his wife, Riya, and baby son, Aladin. When out on a holiday, Arun is attacked by a gang searching for a magic lamp, which Chatterjee has found, but has hidden somewhere. Arun and Riya Chatterjee are murdered; Aladin is raised by his grandfather.
After his granddad's death, a now grown-up Aladin Chatterjee (Ritesh Deshmukh) lives in the fictional city of Khwaish. He is lonely, and Kasim (Sahil Khan) and his gang members have bullied Aladin since his childhood. His life changes when Jasmine (Jacqueline Fernandez) enters the city, and the two fall in love with each other.
Jasmine has a birthday party for Aladin, and as a present Kasim gives Aladin a magic lamp for his birthday to embarrass him in front of Jasmine. However, this lamp turns out to be the magic lamp that Aladin's father's murderers were trying to find.
Aladin rubs the lamp and releases the genie, Genius (Amitabh Bachchan). Desperate to grant him three wishes so his contract with the magic lamp can end, the rock-star Genius suddenly makes Aladin's life very interesting but chaotic. Aladin doesn't want to make any wishes, but Genius enters Aladin's dreams and finds out what he wants, getting his sleeping mind to make a wish: to make Jasmine fall in love with him.
When he wakes up, he doesn't like what Genius has done and uses his second wish to return Jasmine to normal. His third wish is for Genius to help him woo Jasmine without using magic to make it happen. Genius does his best, but magic is really his strong suit. Still, as a result of Genius's help/interference, Aladin stands up to Kasim and starts a relationship with Jasmine, and Genius teaches Kasim a lesson.
Aladin's future looks perfect, until the real threat looms on the horizon - the ex-genie, Ringmaster (Sanjay Dutt). Ringmaster is searching for the magic lamp and kidnaps Jasmine with the help of his circus gang. Shortly after Genius and Aladin realize she has been kidnapped, an informer (really Ringmaster in disguise) tells Aladin that it was Genius who murdered his parents.
Aladin insults Genius and tells him to leave. Heartbroken, Genius goes to rescue Jasmine alone. As he arrives, it is revealed that Ringmaster is the one who actually killed Aladin's family, as he has been searching for the magic lamp for a long time; Aladin's parents found it first, and Ringmaster punished them for it.
Ringmaster steals the magic lamp and wishes for Genius to kill Aladin, but Genius refuses to do it, and loses his magic because he didn't grant the wish, just as Ringmaster had planned. Aladin learns that Genius is innocent and arrives to help him, and they succeed in rescuing Jasmine.
Ringmaster's plan is then completely revealed: he plans to perform a ritual to steal the reflection of an approaching comet, getting back his genie powers as a result. Genius, Aladdin and Jasmine intervene, however, and Aladdin steals the comet's reflection, giving genie powers back to Genius instead of Ringmaster. Genius seals Ringmaster inside a mirror and then shatters it, and Ringmaster's gang is finished as well.
In the end, the trio happily gets back to the city, Aladin and Jasmine are a couple, and after earning special superpowers from the comet, Aladin gives Kasim yet another lesson.