After detailing the events in K.G.F: Chapter 1, Anand Ingalagi suffers a stroke and his son, Vijayendra, takes over to narrate the rest of the story. Rocky kills heir apparent Virat and takes over the K.G.F, keeping Reena hostage to ensure the cooperation of Guru Pandian, Andrews, Rajendra Desai, Kamal and Daya. But when Rocky demand to take Reena as his wife, Kamal got enraged and protests against Rocky. This leads Rocky to kill Kamal infront of everyone. He issues orders to start work in eight hidden mines. Meanwhile, Adheera resurfaces and kills all guards at an outpost. In a ruse to bring Rocky to Adheera, Andrews kills Desai to lure Reena outside K.G.F, and John captures Reena. Adheera shoots Rocky but spares his life, while his men roadblock all gold exports from K.G.F.

Meanwhile, Shetty ties up with other subordinates of Andrews across India's western coast and exterminates Rocky's allies with Inayat Khalil's newfound support, but Rocky's aides kill Shetty's associates and recapture the coast. A recuperated Rocky, along with Reena, visits Dubai to deal in gold with Khalil, and also buys Kalashnikovs from him. Rocky and his gang gravely wound Adheera and kill his henchmen with their newly acquired weapons. Exasperated with K.G.F, some central ministers had planned a no-confidence motion against the DYSS-supported government to bring Ramika Sen in power, but Rocky's henchmen threaten other ministers against the vote and the motion fails. Rocky also kills Shetty, gaining control over Bombay. Pandian warns Rocky of Sen's rising stature, but he disregards him.

In 1981, Ramika Sen wins the Indian general elections and becomes Prime Minister. After CBI officer Kanneganti Raghavan briefs her about the situation in K.G.F, she issues orders to close all state borders and authorises Raghavan to raid Rocky's warehouses. A young Ingalagi is caught spying by Rocky's henchmen, but Rocky is impressed by his integrity. The CBI find nothing in their raids save for a 400 gram-gold bar. Rocky retrieves it from a police station and singlehandedly brings the place down with a DShK. Rocky halts all exports from K.G.F, which strains relations with Khalil, but continues the mining. His aides trace his biological father, a drunkard who abandoned his family, and pays the unaware man to take care of Shanti's newly shifted grave. Reena confesses her feelings to Rocky and they get married.

Rocky meets with Sen and hands her a file exposing his involvement in money laundering, but she cannot consider it as almost all her party members are complicit in the corruption. Still furious after his defeat, Adheera makes his way to K.G.F through a secret passage with Andrews, Daya and John, supported by Khalil's armada. Just as Reena reveals her pregnancy to Rocky, Adheera fatally snipes her. In the ensuing clash, Rocky's army kill Andrews and Daya, while Rocky kills John and chokes Adheera to death. Rocky and his henchmen disrupt Sen's speech at the Parliament and kill Pandian (who had staged the attack on Garuda for which Adheera was framed, and informed Adheera of Garuda's attack priorly. He was also the one who showed Adheera the secret passage, goaded Andrews into hiring Rocky, staged the no-confidence motion drama in Delhi, and persuaded Shetty to join forces with Khalil just to gain Rocky's trust).

Sen issues a death warrant against Rocky and enforces the Indian Army. Rocky evacuates K.G.F and leaves on a ship with his cache of gold. Before leaving, Rocky forms a new colony for all K.G.F workers. He signals the Navy to his location, but refuses to surrender. Sen issues orders to bomb K.G.F and Rocky's ship, and he drowns in the ocean along with the gold, which stays lost till date. A young Ingalagi decides to write a book on Rocky. In the mid-credits scene, three months prior Rocky's death, a CIA official hands over a file listing Rocky's crimes in the United States and 16 other nations between 1978–1981 to Sen. In the present, the peon of the television news channel finds the final draft of K.G.F: Chapter 3.