Dev Anand stars as Raju, a freelance guide, who earns his living by taking tourists to historic sites. The movies starts with Raju being released from jail, and then the story runs in flashback. One day, a wealthy and aging archaeologist Marco comes to the city with his young wife Rosie (Waheeda Rehman) the daughter of a courtesan. Marco wants to do some research on the caves outside the city and hires Raju as his guide. He discovers a new cave and ignores Rosie.
While Marco devotes himself to the discovery of the cave, Raju takes Rosie on a tour and is captivated by her impetuous beauty. Raju learns about Rosie's background and how Rosie has achieved respectability as the wife of Marco but at a terrible cost. She has had to give up her passion of dancing since it is unacceptable to Marco. Meanwhile, Rosie tries to commit suicide by consuming poison. Marco, upon knowing the incidence returns from the caves to see Rosie and gets furious on Rosie after seeing her alive. He tells Rosie that her act of committing suicide was a drama, otherwise she would have consumed more sleeping pills so that she could really have died. On returning to Udaipur, Rosie discovers that Marco is having an affair with a native tribal girl. Rosie is mad at Marco, and again wants to end her life. But Raju calms her by saying that committing suicide is a sin, and that she should live to pursue her dream. She finally says good-bye to the relation of being the wife of Marco. But now she needs support and a place to live. It is here that Raju takes her to his home.
Rosie is considered a prostitute by Raju's community which leads to many problems including his mother and her brother insisting that Rosie be kicked out. Raju refuses and his mother leaves him. His friend and driver also falls out with him over Rosie. Raju loses his business and the entire town turns against him. Undeterred by these setbacks, Raju helps Rosie embark on a singing and dancing career. As she rises as a star, Raju becomes dissolute—gambling and drinking. Marco comes back on the scene. Trying to win Rosie back, he brings flowers and has his agent ask Rosie to release some jewelry which is in a safe deposit box. Raju, a bit jealous, does not want Marco to have contact with Rosie and forges Rosie's name on the release of the jewels. Rosie and Raju drift apart. Rosie learns of the forgery release and Raju is convicted of forgery, resulting in a two year sentence. On the day of his release, his mother and Rosie come to pick him up but they are told that he was released six months ago because of his good behaviour.
Upon his release Raju wanders alone. Despair, poverty, rags, hunger, loneliness, until he finds a wandering group of sadhus with whom he spends a night at a derelict temple in a small town. He sleeps and one of the itinerant holy men places a shawl upon him while he sleeps. The holy men leave. The next morning, a farmer (Bhola) finds Raju sleeping under the orange shawl. Bhola thinks Raju is a holy man. Bhola is having a problem with his sister because she refuses to marry. Raju impresses upon the woman the logic in taking a husband and she submits, which convinces Bhola that Raju is a swami (holy man). Impressed by this Bhola spreads the news through village. Raju is taken as the holy man for the village. The farmers bring gifts for him and start consulting him with their problems. Raju assumes the role of village holy man (Swami Ji) and engages in skirmishes with the local pandits. In telling a childhood story, Raju speaks of a holy man whose 12 day fast resulted in God's bringing rain to end a drought.
A drought and ensuing famine hit the region hard. Through miscommunication of a village fool, Raju's (Swami Ji) words are interpreted by villagers that he will fast for 12 days to end the drought. He finds himself trapped by villagers' belief. At first Raju opposes the idea, going as far as telling Bhola that he is just a human like any one of them and even worse a convict who has undergone trial and jail-term over a woman. But even the confession was not enough for the villagers to give up on their belief who quote the story of decoit Ratnakar who became Valmiki. He reluctantly begins the fast, although he does not believe that there is any relation between a man's hunger and rain. With the fast, Raju undergoes a spiritual transformation. As the fast goes on, his fame spreads. People by the thousands come to see him and take his blessings. An American journalist asks him whether he truly believes that his fast would bring rain, he smiles and says "These people have faith in me, and I have faith in their faith". Upon hearing his fame Rosie pays him a visit, so does his mother and his friend. He now has everything he has lost a long time back. His health starts falling, and he thinks about the meaning of his life. On one side there is Rosie, his Mother and a chance to get back to his past life and on the other side there is a noble cause to fast and hope for the rain. He gets enlightened by the concept that his past sins are washed away by his anguish and the Guide Raju he knew has died. And now the only thing that remains is the spiritual Raju, which is indestructible. He is reconciled with his mother, Rosie and the driver during his ordeal. He transcends this life. Amidst thunder clap and heavy downpour, his soul departs this earth while the crowd rejoices and his beloveds cry.
Notwithstanding with is sad end, the title of this movie Guide appears to have a message for mankind that from a simple Tourist Guide, Raju could transcend himself to become a Life Guide for the common man. It probably talks of a hope that a criminal, broken, used and depressed person can have by looking life from another perspective, where all that is past can be reconciled by what is present, though, may not be in absolute terms.
Some of heart-rendering songs and painful situations are depicted in this film of a happy-go-lucky Raju Guide whose life takes a turn of misery as finds himself lost in the pursuit of the worldly affairs, viz., money, his crave for the love of a woman, and liquor and gambling. Raju's confession to his secretary and the subsequent song, Din dhal jaye hai, Raat na jaye are sure to touch anyone's heart which will make the character of Raju Guide immortal for the ages to come.