Phantom movie is all about Pailey (Mammootty) has come from Irutupetta, a small village in rural Kerala to Mumbai and made a name for him. He had come originally to Mumbai with the hope of making it big in Bollywood as an actor. But after many failed attempts, he becomes a stuntman who becomes the dupe for big stars. Due to his dare devil stunts he gets the name Phantom Pailey.

A lorry driver gives a lift to a stranger, unaware of the consequences of this action. Yakobi, a lorry driver works at a dairy farm. He marries Saritha without anyone's knowledge and they have a baby. One day, a stranger named Muthu asks Yakobi for a lift and says that he needs a job. Yakobi helps him get a job at the dairy. However, Muthu turns his life upside down.

Using Devadasi, a magical weapon, Kay and his companion fight an evil force that is on the verge of destroying the human race.