Tsotsi (Presley Chweneyagae) is a petty-crime gang leader. He and his friends Boston, Aap and Butcher (Mothusi Magano, Kenneth Nkosi, Zenzo Ngqobe) rob a older man on a crowded subway then Butcher stabs him quietly and they flee once the subway is empty. Boston is sick afterwards.
The gang goes to the local bar for a drink and Tsotsi mocks Boston for getting sick. Boston asks Tsosti what his real name is and a antagonizes him about what happened to him that made him this way. Boston pushes Tsotsi too far and Tsotsi hits him, pushing him to the floor. He continues the beating on the floor, hitting him numerous times in the face and kicking him in the side. Tsotsi then walks out of the bar.
Tsotsi walks through the rain and makes his way towards a upper class house where a car just pulled up to the gate. A woman, Pumla (Nambitha Mpumlwana) gets out and rings the bell and speaks to someone asking him to open the gate. Tsotsi runs up, draws his gun and points it at her. He gets in the car and she tries to stop him from leaving. As Tsotsi shifts from reverse to drive he's stopped for a moment and Pumla manages to get the car door open and tries to tell him to stop but Tsotsi shoots her and drives off.
Suddenly he hears a soft crying: it's a baby. He swerves and hits a sign, almost running off the road. The car is smoking as Tsotsi runs around to the back door to look at the baby. He considers leaving on his own but finally, he puts the baby in a paper shopping bag and leaves the car.
Tsotsi brings the baby to his small home. He wakes up the next morning and triess to change the baby but doesn't have anything to properly take care of it. He feeds the baby with some milk but is interrupted by his friends at the door. They make plans to meet later at the subway station.
Tsotsi bumps into a handicapped man, Morris (Jerry Mofokeng) at the subway station before meeting his friends and he yells at him. Tsotsi just stares at him when Morris spits on his shoe. The man leaves and Tsotsi follows him all the way to a quiet spot. Tsotsi stops him and tells him to walk, that he is faking his leg injury. Morris insists that he is not faking and explains that he was hit by a falling beam while working in the mines. Tsotsi compares him to a dog whose back has been broken but still tries to crawl around without the use of its back legs. He asks him why he bothers to live. The man says he likes feeling the heat of the sun. Tsotsi leaves him.
When Tsotsi returns home ants are all over baby and he realises he doesn't know how to take care of it. He takes the baby to Miriam (Terry Pheto)'s home, and forces her to breast-feed the baby. They start talking, and she asks what the baby's name is. Tsotsi tells her that the baby's name is David. She convinces him to leave the baby with her and that she will take care of him. Tsotsi before leaving reminds her that the baby is his.
Tsotsi goes to see Boston at Soekie's (Thembi Nyandeni) house and explains that Boston should be at his house and that he will take care of Boston. Tsotsi tells a story about finding Boston in the streets and how he took care of him then. This convinces Soekie to let him come to Tsotsi's house.
After settling Boston in, Tsotsi and his friends Aap and Butcher return to the baby's home to rob it. They hold John (Rapulana Seiphemo), the father, at gunpoint and tie him to a chair. Butcher insists on killing John but Tsotsi tells him they will later and stops him. His friends do not know Tsotsi's true intention of stealing items for the baby. While Aap is looking for alcohol in the kitchen instead of watching John, John pushes an alarm button on his keychain.
Butcher, who had found a gun in the bedroom he was ransacking, races over and puts the gun to John's head. He tries to shoot him but the gun's safety was on. Before he can fire again Tsotsi shoots Butcher. Tsotsi and John share a look before Aap and Tsotsi flee the scene in John's car.
They sell the car in a car yard and Tsotsi starts to walk away and realizes that Aap isn't coming. Aap asks him when it is his turn. Tsotsi doesn't understand. Aap explains that first he hurt Boston, now he killed Butcher and when is Tsotsi going to turn on him. Tsotsi gives him some of the money they got for the car and leaves him.
Tsotsi returns to Miriam's house and she offers him food. She tells him she knows where he got the baby, that she read it in the news. Tsotsi freaks out, takes the baby and begins to leave. Miriam tells him he needs to return the baby and Tsotsi asks Miriam if he could still come over to her home depending on what he decides. Miriam says yes and Tsotsi leaves.
Tsotsi brings the baby back home and wakes Boston up. He tells Boston that he is sorry. Boston wakes up the next morning to police pointing guns at him after Soekie tells the police where Tsotsi lives. Boston doesn't know anything about the baby or where Tsotsi went.
Tsotsi is dressed nicely and waking in the subway station. As he walks past Morris he offers him money. He then comes to the baby's home and a police man notices him outside and calls for backup. Tsotsi pushes the intercom and tells John that he is going to leave the baby outside. The baby starts the cry and Tsotsi picks it up to quiet it as John comes outside.
The police all pull up and point their guns at him. Tsotsi freezes and refuses to drop the baby. Pumla comes outside and tells him to give her baby back. John tells the officers to lower their weapons and they do so. He talks to Tsotsi as he slowly opens the gate and comes to him to get the baby. Tsotsi lets him take the baby from his arms and the police tell him to raise his hands above his head.