Hera Pheri ended with the trio of Raju (Akshay Kumar), Shyam (Sunil Shetty), and Baburao Ganapatrao Apte (Paresh Rawal) rich and rolling in money. Phir Hera Pheri tells the story of what happens after they become rich.
The film opens with a prologue bringing the audience up to date, stating that each has suffered a personal loss despite their new riches. Shyam lost his love, Anuradha (Tabu), in an automobile accident, Raju’s mother died after battling a disease, and Baburao – having nothing to lose in the first place – lost the little traces of common sense that he did possess.
The three men are living a king’s life in a massive bungalow and splurging on various luxuries. Raju hears about an idea for doubling his wealth from a con woman, Anuradha (Bipasha Basu), who is claiming to be a bank manager, and he convinces Shyam and Baburao to go along with it. Raju first arranges for ₹30 lakh from Shyam and Baburao and then a further ₹50 lakh by selling their bungalow. He convinces a small-time goon, Pappu (Rajpal Yadav) to contribute the remaining balance of ₹20 lakh so that he can come up with the minimum deposit of ₹1 crore, which Anuradha has promised to double.
The trio invest the money and three weeks later realise that it was all a scam and that they are now penniless. To make matters worse, they do not even have possession of their bungalow, which Raju had sold off in order to arrange the last bit of money needed, and have to live in a chawl (tenement). Pappu shows up to the bungalow the next day to pick up his portion of the money, but is shocked to learn that Raju has left and the bungalow is now in possession of a gun collector (Dinesh Hingoo). Pappu is now in trouble because he had borrowed money from a lisping but dreaded gangster, Tiwari (Sharat Saxena), who will kill him if he doesn’t pay up. He comes across Raju one day, and upon hearing of the scam pretends to be sympathetic. He tricks him and brings the three to his boss, telling him that they are the ones who took the money. Tiwari threatens them and tells them they have to come up with the money or else they will die. As they are being taken home by some of Tiwari’s goons, the three manage to escape. Raju, Shyam and Baburao are about to leave the city when Raju remembers that he owes money to a woman named Anjali (Rimi Sen). The three head over to her house and are surprised to find that she is Pappu’s sister. Tiwari’s goons show up and kidnap Anjali because Pappu has not returned the money. Feeling guilty that he is the one who got Anjali in trouble, Raju decides that he will go to Tiwari and try to get her freed. Shyam and Baburao refuse to leave without them and decide to stay as well. The three go back to Tiwari to ask him to release Anjali, and Tiwari tells them to bring the money, releasing Anjali.