As his mother succumbs to illness, David flees from an abusive father, finding temporary refuge among a group of other homeless children living in abandoned concrete construction pipes. Fast forward a few years, David has reinvented himself as Tsotsi, the charismatic leader of a gang that includes his companions Butcher, Aap, and Boston.
After a robbery goes wrong, resulting in a murder committed by Butcher, Tsotsi and Boston engage in a violent confrontation that leaves Boston severely wounded. In a reckless move, Tsotsi shoots Pumla, a young woman, during a car theft, only to be shocked by the discovery of a three-month-old baby in the back seat. In a desperate attempt to cover his tracks, he hastily removes valuables from the car and takes the infant back to his makeshift home. Pumla, though surviving the ordeal, ends up wheelchair-bound and collaborates with a police artist to create a composite sketch of Tsotsi, leading to a public hunt for him.
Feeling overwhelmed by the responsibility of caring for the baby, Tsotsi spots Miriam, a woman with a young child, gathering water. He follows her to her home and, under the threat of a gun, coerces her into feeding the kidnapped child. Simultaneously, Fela, a wealthy gang leader, attempts to lure Aap, Boston, and Butcher into his organization. During a subsequent visit, Miriam implores Tsotsi to let her care for the baby on his behalf, a request he ultimately consents to.
Determined to look after the injured Boston, Tsotsi instructs Aap and Butcher to help take him to his home. Nicknamed Teacher Boy by his friends, Boston reveals he has never completed the teachers' examination. Tsotsi promises to help raise the needed funds for Boston to take the exam, leading them to plan yet another robbery.
This time, Tsotsi and Aap target Pumla's house. When Pumla's husband, John, returns from the hospital, they ambush him and tie him up. Aap watches John, while Butcher scours the bedroom for valuables, and Tsotsi rummages through the baby's room. However, chaos ensues when Aap accidentally triggers an alarm system while raiding the fridge, prompting Butcher to attempt to silence John with a pistol. In a swift act of violence, Tsotsi shoots and kills Butcher, and he narrowly escapes with Aap just as law enforcement arrives on the scene.
Haunted by the killing of Butcher and fearful of Tsotsi's unpredictable nature, Aap decides to leave the gang. When Tsotsi returns to Miriam's home, she reveals that she knows the baby’s origins, urging him to return the child to its rightful parents.
Emboldened by her conviction, Tsotsi resolves to return the baby. He arrives at John's house and communicates through the intercom that he will leave the child outside the gate. Just then, an officer stationed nearby alerts Captain Smit, who hastens to the scene, arriving just as Tsotsi prepares to leave.
Surrounded by police who demand he return the infant, John pleas for them to lower their weapons, requesting to reclaim the baby himself. In a moment of poignant clarity, Tsotsi holds the baby tightly in his arms while John implores him to relinquish the child. Overcome with emotion, Tsotsi hands the baby to John and then, at the direction of the police, slowly raises his hands in surrender, submitting to his fate as the film reaches its haunting conclusion.
