Arriving at Nandigama, a town in Andhra Pradesh, three youngsters are shown entering a haunted palace only to be killed immediately by a strange entity. Their corpses are found later, increasing the number of bodies that have surfaced over time at the palace to 34.
Six months later, a TV channel plans to host a reality show in that haunted house. It is aptly called Dhayyam tho 7 Rojulu, Pattukunte 3 Kotlu (7 days with ghost, survive it to win Rs. 3 crores). Seven individuals - Ashwin [Ashwin Babu], Nandu [Chethan Cheenu], Barbie [Eshanya Maheshwari], Bala Tripura Sundari [Dhanya Balakrishna], Shivudu [Dhanraj Sukhram], M. Y. Danam [Shakalaka Shankar], and Bujjimma [Vidyullekha Raman] - are selected and they reach the palace where the Program head Pakodi [Prabhas Sreenu] and Chekodi [Raghu Babu] have arranged all kinds of scares for the contestants.
Initially, everything is normal, but after some time, the contestants start feeling paranormal activities around them. Everyone begins to believe that the palace is indeed haunted, especially Ashwin. The only exception is Nandu, a doctor who refuses to accept such supernatural stories. Meanwhile, Ashwin reveals his past to Bala. His brother Dr. Karthik [Rajiv Kanakala] had begun a revolution of donating organs. But suddenly, he was found dead, and his body was discovered at the Mahal in Nandigama. Seeing Karthik's corpse, Ashwin's mother suffered strokes, and Ashwin has participated in this contest only to pay for the hospital charges.
The show progresses, and the hauntings and attacks on the contestants increase, causing the death of Shivudu. Nandu, like the others, is now convinced that the house is haunted, but this time, it is Ashwin who claims that there are no ghosts here, which leaves everyone shocked.
To investigate further, Ashwin goes around the palace alone and discovers a secret chamber. From there, he extracts his deceased brother's mobile phone. Ashwin shows the phone to Bala, and on turning it on, they find a video shot by Karthik. Karthik had visited this palace and discovered the same secret chamber where bodies were being mutilated. However, before he could expose the culprits, he was killed, his death being recorded on the phone. The culprits, caught on camera, are none other than Nandu and Barbie.
In the next scene, Ashwin and Bala are injured and captured by Nandu in the chamber. Nandu and Barbie threaten Ashwin that he has been caught, and should he reveal the truth, Bala will be killed and her body mutilated. But here, the final mystery of the movie is disclosed. It is revealed that it is not Ashwin but Nandu who has been trapped.
In reality, there are no ghosts in the palace at all. This whole reality show was set up by Ashwin with the help of police and media to catch the murderers of his brother, and 30 others who died in the palace. Nandu and Barbie run an organ smuggling racket. Ashwin had suspected them, which is why they were selected. It is further revealed that all the hauntings that occurred a few days ago with Barbie and others were orchestrated by Ashwin and Shivudu (the latter is revealed to be alive in the end).
The film ends with Ashwin being interviewed on his experience and how he donated the rest of the money to charity.
