Anil (Mithun Chakraborty), a street performer from the Bombay slums and a wedding singer, is scarred by the memory of the rich P.N. Oberoi (Om Shivpuri) beating his mother (Gita Siddharth) in an incident during his childhood. When David Brown, the manager (Om Puri) is fed up of Indian disco current champion's tantrums Sam (Karan Razdan) and looks for some new talent, he happens to watch Anil dance-walking across a street. Rebranded as 'Jimmy', the rising disco star must take the throne from Sam and win the heart of Rita (Kim Yashpal), Oberoi's daughter.

All seems to be going well until Oberoi hires men to connect Jimmy's electric guitar to 5,000 volts of electricity, causing Jimmy's mother to die in a tragic accident. Jimmy gets guitar phobia after witnessing his mothers death. Later, Oberoi's goons break his legs. With help from Rita, Jimmy begins to walk.

Jimmy must claim first place for Team India at the International Disco Dancing Competition amidst strong competition from Team Africa (Disco King and Queen) and Team Paris (Disco King and Queen). Jimmy is reluctant to dance, but Rita persuades him to do so. Sam arrives with a guitar to scare Jimmy. Rita manages to drag the show to encourage Jimmy to sing, but to no avail. The crowd pelts him with stones which hit his head. A person arrives and advices him to infuse his mother and his music; he throws the guitar to him, after which he begins to sing. Oberoi's goons kill the person, after which Jimmy travels to their lair and beats them up. In the ensuing fight, Oberoi is electrocuted.

• Mithun Chakraborty as Anil / Jimmy
• Kim Yashpal as Rita Oberoi
• Rajesh Khanna as Master Raju
• Om Puri as David Brown
• Om Shivpuri as P.N. Oberoi
• Gita Siddharth as Radha
• Karan Razdan as Sam
• Bob Christo as a Russian goon
• Kalpana Iyer as Nikki Brown
• Master Subramanium as younger Anil

The title song I am a Disco Dancer was shot at Natraj Studio in Mumbai over three days, where scenes featuring Mithun Chakrobarty's signature moves were filmed. Thereafter, the shooting featured crowds scenes at Filmistan Studio in Mumbai.

The music for all the songs were composed by Bappi Lahiri and the lyrics were penned by Anjaan and Faruk Kaiser. The tracks on the 1982 soundtrack album are as follows:

The song "Yaad Aa Raha Hai" has been described as a synthesized, minimalist, high-tempo, electronic disco song. Geeta Dayal described it as a "disco anthem for the ages, and one of the best songs Lahiri ever did." It has been cited as a possible influence on the 1982 prototypical acid house album Synthesizing: Ten Ragas to a Disco Beat by Charanjit Singh.

The song "Auva Auva" (picturized on Karan Razdan's character Sam) has similarities to the 1979 English synthpop hit "Video Killed the Radio Star" by The Buggles. The song "Cerrone's Paradise" by Cerrone was used in the scene when David Brown discovers Anil who is dance-walking down a street. The song "Krishna Dharti Pe Aaja Tu" has similarities to "Jesus" by Tielman Brothers. This version was used in the movie where Jimmy is practicing dance.

The Disco Dancer soundtrack was popular worldwide, particularly in India and the Soviet Union. It was also popular in China, where the soundtrack received a Gold Award.

The British Sri Lankan alternative rapper M.I.A. covered "Jimmy Jimmy Jimmy Aaja" as "Jimmy" in 2007 for her album Kala. The music of this song was also used in the 2008 Adam Sandler movie You Don't Mess with the Zohan. There have been cover versions of "Jimmy Jimmy Aaja Aaja" from other international musicians, including the 1998 hit "Jimmy" by Russian techno group Ruki Vverh, "Jimmy Jimmy" by Russian artists DJ Slon and Angel-A, and a cover version by Tibetan artist Kelsang Metok.

In India, the film grossed ?6.4 crore in 1982. It was the 7th highest-grossing film at the domestic Indian box office in 1982, with its strongest commercial performance in the West Bengal state, home to actor Mithun Chakraborty and composer Bappi Lahiri.

In the Soviet Union, the film released in 1984, with 1,013 prints. It drew an audience of 60.9 million viewers in 1984, becoming the most successful film at the Soviet box office that year, the biggest foreign hit in the 1980s, the fourth biggest box office hit of the decade, the eighth biggest foreign hit of all time, and one of the top 25 biggest box office hits of all time.^[12][14] In terms of gross revenue, it earned 60 million Soviet rubles^[7] (US$75.85 million,^{[n 2]} ?94.28 crore),^{[n 3]} the highest for an Indian film, surpassing Awaara's 29 million rubles.^[13] This made it the highest-grossing Indian film overseas up until it was surpassed by the over ?100 crore overseas gross of My Name is Khan (2010)^[15] and 3 Idiots (2009).^[16][17] Disco Dancer was also a success in China, where the song "Jimmy Jimmy" was popular. According to Aamir Khan, Mithun Chakraborty is famous in China due to the song.^[18]

Worldwide, Disco Dancer grossed a combined ?100.68 crore (US$82.39 million) in India and the Soviet Union. This surpassed the ?35 crore gross of Sholay (1975),^[19] making Disco Dancer the highest-grossing Indian film worldwide up until it was surpassed by the ?135 crore gross of Hum Aapke Hain Koun (1994).^[20] Disco Dancer was the first Indian film to gross ?100 crore worldwide.^[21]

It was remade in Tamil as Paadum Vaanambaadi with Anand Babu, and in Telugu as Disco King with Nandamuri Balakrishna.

In 2010, the songs "I Am a Disco Dancer" and "Yaad Aa Raha Hai" were used in the 2010 Bollywood comedy film, Golmaal 3, directed by Rohit Shetty. The songs were relevant to the performance of Mithun Chakraborty's character Pritam, who reflected on his past as a young mega-hit disco dancer. The first song was the inspiration to Devo's 1988 "Disco Dancer."

The music from "Jimmy Jimmy Aaja Aaja" was used in the final fight scene in the Adam Sandler film You Don't Mess with the Zohan.^[22]

Aamir Khan's special appearance as Disco Fighter in the Imran Khan starrer 2011 film Delhi Belly is inspired by