Naamkaran is the story of little Avni, an illegitimate child, whose father Ashish and her mother Asha/Ayesha are not married but consider themselves as husband and wife. Despite being unmarried, Asha applies vermilion on her forehead to avoid social problems. Asha and Ashish still have a live-in relationship, unknown by the rest of the world including Ashish's family and his mother, Dayawanti. Avni, however, gets continuously teased by others because of the absence of her father. She deeply wishes for her family to become a 'normal' one but her father stays away most of the time due to his mother Dayawanti.
Back in 1981, a misunderstanding and a riot between fellow Muslim and Hindu villagers in Dayawanti's village resulted in Dayawanti losing her husband and since then, Dayawanti has hated Muslims. Though her sons and daughter did not know about the event, they knew about Dayawanti's hatred towards Muslims and this prevented Ashish from ever opening the topic of his relationship with Ayesha in front of Dayawanti. However, upon Avni's continuous insistence to come to her annual sports day, Ashish finally bears up the strength and informs his mother, through email, about his relationship with Ayesha, his daughter Avni and his not-yet-born child. Dayawanti fails to accept a Muslim daughter-in-law. Also, by then, Dayawanti had already given her word to Hemant, diagnosed with brain tumor, about getting Ashish married to his daughter, Neela. Dayawanti uses the situation to her benefit and convinces Ashish to get engaged to Neela.
At one point of time, after Ashish gets irritated as a result of his mother's continuous insults towards Asha and Avni, Ashish decides to go and live with Asha and Avni. Dayawanti doesn't stop, however. She performs a suicide drama and is successful in bringing Ashish back. After this, Ashish does not return back to Asha and Avni again, lest his mother should perform a suicide attempt again.
Avni realizes that she needs to face life on her own and that she had to overcome all possible hurdles if she wanted to have a 'normal' family. She joins a fashion show, but soon learns her sponsor is Dayawanti, and is kicked out. Soon, she meets Neela and becomes friends with her. Neela learns Avni's story. She is heartbroken for having lost her love, but angry upon Ashish for having cheated both her and Ayesha and for not standing up for his love despite Dayawanti's hatred.
Avni decides to make a movie on her life. She makes the movie successfully. However, just before the release, Dayawanti gets informed about it, and in her efforts to stop the release before the deadline, Asha goes into coma as a result of an accident planned by Dayawanti.