Kireedam movie revolves around Sethumadhavan (Mohanlal), the son of Achuthan Nair (Thilakan), a Police Constable who wishes to make his son an Inspector one day. Sethu, a recent college graduate, has many opportunities to enter different fields but he goes with his father's dream of becoming an Inspector. Achuthan Nair gets transferred into a town whose residents are troubled by the rowdy Keerikkadan Jose (Mohan Raj). The police force in the town turns a blind eye to the acts of Keerikkadan Jose. One day Achuthan Nair gets information that Keerikkadan Jose is creating trouble in the market place. Being an honest police man he goes on site to investigate where he takes him on. Hearing of trouble Sethu too rushes to the market place. Achuthan Nair is no match for the goon and Sethumadhavan tries to intervene before his father gets killed.
A fight ensues between Keerikkadan Jose and Sethumadhavan and both are arrested by the police. Since he managed to defeat the reigning rowdy, Sethumadhavan is typecast a rowdy the people of the town.
After recovering, Keerikkadan Jose targets Sethumadhavan and his family. With the police failing to protect him, Sethumadhavan is forced to fight for his life and ends up killing Keerikkadan. Sethumadhavan is sentenced to prison for murdering Keerikkadan and hence is disqualified in being a Police Inspector. Head Constable Achuthan Nair reads the Police Verification Report which states Sethu as a "notorious criminal".