Based on a folktale, the story of Kaalo revolves around a desert witch of the same name. Kaalo was a witch who lived in Kulbhata during the 18th century. She was killed and buried by angry villagers for sacrificing young nubile girls to satisfy her greed for immortality, but her fear lived on. Year's later villagers spoke of Kaalo's sightings yet again. They claimed she was even more angry and dangerous and she was back to finish what she left incomplete. Kulbhata was vacated overnight by scared villagers. All roads leading to Kulbhata were sealed by horrifying tales of Kaalo killing anyone who dared to enter Kulbhata until a bus carrying eleven passengers on its way to Kuldevi had to pass through Kulbhata. One of the passengers on the bus was a twelve-year-old girl named Shona who was travelling alone to spend her vacation at her grandmother's house in the neighboring village. Shona was clever, witty and cheerful. She soon became the life of the journey.
Everyone loved her endearing manners. Especially the reclusive and reticent Sameer, who was traveling with a bag loaded with gunpowder to blast a small hillock which would give way to a water canal for his drought hit village. Badly disfigured and thirsty for blood, Kaalo could smell the girl from miles away and headed straight for the bus. She would kill everyone who came in her way, she had to have the girl anyhow. When the passengers suddenly realized they were staring into death everything changed. From being the life of the journey, Shona became their very reason for dying. Everyone wanted her out of the bus, some even used her as a bait to lure Kaalo away from themselves. Human relations changed as they fought for their survival. No one except Sameer had the guts to stand up for Shona. It didn't matter to him whether Kaalo was a creature or a witch. All he knew was that he has to protect Shona at any cost because time was running out for him and his co-passengers who were still alive. At the end of the movie sameer pierces two sticks in kaalo's eyes making her blind and inserts a knife in kaalo's body. Now for kaalo was not able to see anything, Sameer hangs the gunpowder bag on kaalo's neck and lights the gunpowder. Kaalo explodes into pieces and goes underneath the earth. At the end of movie, Shona and Sameer goes towards home.