Rohit Mehra (Hrithik Roshan) and Nisha (Preity Zinta) are married and they have a child, Krishna (Hrithik Roshan). Rohit apparently dies in a lab accident in Singapore; Nisha dies shortly after hearing the news of her husband's death. The child, Krishna, grows up under the care of his grandmother Sonia (Rekha). As Krishna is growing up, Sonia discovers that he has inherited the superpowers that were transferred to his father by the alien Jadoo in the previous installment, Koi... Mil Gaya.
As the head of a large information company based in Singapore, Dr. Arya had hired Rohit to build an advanced computer that could see the future, telling Rohit that it will be used to avoid disasters and improve mankind. The brilliant Rohit takes just two years to invent the prescient computer. When he discovers with its help that Dr. Arya will betray him, using the knowledge granted him by the computer to empower himself instead, Rohit destroys the computer..
We discover in the beginning of the film that as a young child, Krishna is extremely intelligent and gifted; for example, he is able to draw beautiful portraits of his parents, grandmother, and animals, perform Herculean feats of strength, run at tremendous speed, communicate with non-human animals, and think with great clarity. He performs an IQ test, which helps the school principal realize his abilities, but his grandmother fears that the greedy may exploit him as they did his father, and so the two move far away into a remote village near some mountains. Krishna spends his childhood there, playing with other children and racing with animals. However, he soon grows frustrated as he sees that all those his age are moving away to the city to greater and grander things and he becomes upset at his grandmother for making him stay in the village.
Krishna meets his love interest Priya (Priyanka Chopra) when she visits India from Singapore. During a flight on a parachute-glider, Priya gets tangled in some tree branches and nearly falls to her death. Krishna, using his exceptional agility and strength, rescues her and restores her to the tourists' camp. In order to hide his identity, he instructs the local guide, Bahadur, to spread tales of a ghost. Eventually, Krishna develops a soft spot for Priya and reveals the truth. He is thereafter a friend to the tourist party, until they leave.
Subsequently, Priya and her friend Honey are threatened with losing their jobs as TV journalists. To regain their boss's trust in them, they invite Krishna to Singapore, and lie that Priya loves him, and her single-mother wants to meet him. His grandmother refuses permission at first, worried about his safety, but Krishna accuses her of selfishness, and said if his parents were alive, then they would not have refused. That night, Krishna apologizes, and Sonia tells him about his grandfather (Sanjay), his parents (Rohit and Nisha), the alien Jadoo, and his exploitation by Dr. Arya. In the end, Sonia gives in, for Krishna's heart. Krishna, however, does not break the promise he made to Sonia that he would keep his abilities a secret. During his stay in Singapore, Krishna befriends a local young man called Kristian, after helping him to complete a martial arts demonstration held to raise money for an operation for his wheelchair-bound sister. In return, Kristian invites to the circus he works for.
The hero Krrish as we know him is born when the circus tent catches fire. In order to rescue those trapped by the flames without revealing his powers, Krishna reverses his jacket so that the lining is outermost, then dons a broken mask that he finds on the ground. He then rescues all the people. When the last one to come out asks who he is, he habitually replies "Krrish–" stopping before he can give his full name.
In time, "Krrish" becomes a sensation in the news. Masks like his are sold among children, and the city promises to reward him financially if he should present himself.
When Kristian sees Krrish beat up a group of thugs who have taken Priya's ring– pulling off his mask afterward– Krishna gives him his famous mask so that his friend can gain enough money to help his sister. They show Krrish on TV, and happen to show Krishna and Priya as well.
Vikram Sinha (Sharat Saxena), who was Dr. Arya's senior security officer, and Rohit's best friend, has been looking for Rohit's son for a very long time; having seen Krishna, Vikram follows him. Priya finds a tape that proves Krishna is actually Krrish, and decides to bring it to the public. However, when Krishna comes to know of her intentions, he decides to leave. He explains everything to her regarding his powers and need for secrecy. Priya goes to find her boss to get the tape of Krishna back; there, she runs into Vikram Sinha. She manages to catch up with Krishna before he leaves, whereupon Vikram Sinha tells Krishna why he's trying to find him.
It is revealed that Rohit is still alive and has been in suspended animation for 20 long years. Dr. Arya, his former colleague, is aware that the computer can only have been activated by Rohit's heartbeat and retina scan. He lied to Sonia and Nisha that Rohit died due to a fire at the lab so they will not look for him. When he uses the computer, Dr. Arya sees his own death at the hands of Krrish, and therefore postpones killing Rohit in order to eliminate this new threat. Because Kristian has been advertised and rewarded as Krrish, Dr. Arya kills him. After Krrish finds his friend dead, he becomes intent on getting revenge against Dr. Arya.
After arriving at Dr. Arya's base, Krrish bursts into the compound after disposing of many guards outside. Priya is eventually taken captive, but Krrish manages to rescue both Rohit and Priya after a dramatic battle wherein Vikram is killed with a gunshot to the head by Dr. Arya, and Dr. Arya is fatally impaled to death, exactly as the computer predicted. Dr. Arya's attempts to prevent his death have led to the prediction coming true, much like a self-fulfilling prophecy. Along with Rohit and Priya, Krishna returns to his village in India where Sonia is reunited with her son, and Rohit finds out about his wife's death.
One night, Rohit uses the Om computer developed by his father to contact the alien Jadoo, so that he may thank him.