Kerala Kesari is a costumed adventure fantasy, with the hero playing an adapted Robin Hood character. The King of Maninagaram is dethroned and banished from the country by Regent Chandra Varma. The royal priest and an army officer are in cahoots with the evil Regent. When the noble army chief Rajendran voices his protest against them, he is imprisoned.
Rajendran escapes and seeks refuge in the house of the royal maid, Hema. The Regent's men shoot Rajendran when he tries to escape from a trap set for him. Wounded, Rajendran falls into the sea and is believed to be dead. Unbeknownst to them, Rajendran emerges as Kerala Kesari. He makes the forest his hideout and starts fighting for the downtrodden. Bhavani, a woman who had lost her father to the Regent’s cruelty, joins hands with him. Soon, the two are in love.
Meanwhile, the Regent arrests Hema and keeps her captive in his palace. Kerala Kesari rescues her. Hema's house is set on fire and she rushes to save her father. Hema is arrested again and later freed as part of the Regent’s plan to uncover Kerala Kesari’s hideout. The army reaches the hideout and in the ensuing battle, Hema dies. Kerala Kesari, Bhavani and their followers are captured and brought before the court of law.
The banished ruler appears before the court and reveals the Regent’s plots. The people hail Kerala Kesari as a patriot who fought against injustice. The King takes over the reins of the country again, and Rajendran weds Bhavani.
Though Kerala Kesari was a brave attempt by Vasudevan Nair to produce a Malayalam film at a time when they were not in vogue, the film failed at the box office.