Thambi Vettothi Sundaram is set in Kaliyakkavilai, a town set on the state border. This place has a unique distinction: almost everyone here is educated, and quite peculiarly, almost every second person is involved in some kind of illegal business, ranging from smuggling to the brewing of illegal liquor and other such activities. This place is certainly an antithesis for all those who believe that education is the one solution to all social evils. Here, people seem to be corrupt in spite of education. Sundaram (Karan) is one from the town, well-educated, but not yet initiated into any subversive acts.

He has no idea to drift off onto the wrong side of the law, but the place and people are such that he finds it near impossible to follow a straightforward means of livelihood. He is confused, vexed, angry, and then finds Aala (Saravanan), who seems to understand his troubles; they form a jolly good duo. Who is Aala and what does the duo end up doing? Do they cleanse society, join the fray, or make enemies? In the midst of this, there is a love story as Lourd Mary (Anjali) falls for Sundaram, not without good reason.

Finally, in a fight with the don of smuggling, the don burns Sundaram's eyes with a mix of acid and chalk powder and also breaks a part of his spinal cord. Even though Sundaram kills all, he loses his eyesight and cannot stand erect for more than 15 minutes, so he then kills himself by lying under a moving bullock cart. Two years later, Mary gets Sundaram's appointment letter as a teacher and cries.