Umrao falls deeply in love with Nawab Sultan. He is sincere and promises her a life of respect. For a time, she experiences happiness and the illusion of escape from the kotha (brothel). However, due to his family’s honor and social pressures (a Nawab cannot marry a courtesan), he leaves her to return to his arranged marriage. Her heart is broken.
Later, she meets a handsome, rugged bandit named Faiz Ali (played by Raj Babbar). He is a rebel against the British colonial rule and the oppressive landlords. Unlike the polished Nawab, Faiz Ali is raw, passionate, and sees her as a woman, not an object. They have a brief but intense romance. He is eventually captured and hanged by the British.
At the brothel, run by the strict but wise Khanum Jaan, the girl is renamed Umrao Jaan . Unlike common prostitutes, she is trained as a high-class courtesan (a tawaif )—learning Urdu poetry (shayari), classical music (thumri, dadra), dance (kathak), and etiquette. Her purpose is to entertain nobles and aristocrats, not just for physical pleasure but for art and conversation.