Rajalingam is the only son of Ramalingam, the zamindar of Kalathur. Kannamma is the daughter of Murugan, a farmer of the same place. On the zamindar's advice, Murugan sends his daughter to Madras for higher education. While returning from Madras, Kannamma meets Raja in the train. Noticing her respect and awe for the zamindar, Raja calls himself an electrician visiting the palace. They fall in love. A few days later, Kannamma learns the truth and to reassure her, Raja marries her secretly in a temple.

Two days later, Raja has to go abroad for higher studies. During his absence, Ramalingam learns of the marriage and orders Kannamma to forget his son. Moved by the zamindar's feelings, Kannamma promises never to mention their marriage to anyone. Kannamma is now in the family way. Ramalingam arranges for the stay of Murugan and Kannamma in a nearby town, Sevalpatti. Murugan, who is ashamed of Kannamma's love affair, leaves Kannamma's newborn son in an orphanage and lies that the child was stillborn. They both decide to leave the place and settle in Bangalore.

When Raja returns, he learns that Kannamma had left Kalathur. His inquiries in Sevalpatti lead him to believe that Kannamma had led an immoral life. Grief-stricken, he travels from place to place to forget Kannamma and takes to drinking as a last resort. In Bangalore, he encounters Kannamma in a dancer's house where she had come to teach the dancer's daughter. Her presence in the house and reticence to Raja’s questions strengthens his belief that Kannamma is a woman of ill repute and in disgust, he returns home.

Kannamma’s son Selvam grows up into an intelligent boy and is living in the orphanage in Sevalpatti. Murugan visits the orphanage and on meeting Selvam, decides to shift to Sevalpatti to be near him. Kannamma becomes a teacher in Selvam’s school and feels attracted to him. She invites him to stay with her but he refuses as he has to look after Mani, a lame orphan living with him. Raja is invited to Sevalpatti by Singaram, a rich merchant who wants to marry his daughter Maduram to him, to preside over a school function. Raja takes a fascination for Selvam who acts in the school drama. After the drama ends, he encounters Kannamma again and orders the headmistress to dismiss her.

Mani is critically ill and Selvam turns to Raja for help. Raja brings a doctor who is unable to save Mani. Raja takes Selvam with him to the palace. On Selvam's insistence, he stops drinking and to give him a mother, also decides to marry Maduram. A seriously ill Murugan confesses to Kannamma that her child is not dead and reveals the identity of Selvam. Kannamma tries to contact Selvam but does not find him in the orphanage. The news shocks Murugan and to soothe his nerves, they move down to their village Kalathur. In the local temple, Kannamma meets Selvam and tells him that she is his mother. On learning from him that Raja is bringing him up and is marrying shortly to find him a mother, she asks him not to mention anything about her to Raja. While preparations were going on for the marriage of Raja with Maduram, she comes to know from Selvam that he is the son of Raja. Singaram insists on a written undertaking that the properties of Raja would go to the children of Maduram only. The news of this conflict spreads in the village.

On learning this, Murugan rushes to the palace to own the boy but collapses near the palace gate. Kannamma who has followed takes Selvam and tries to move away when she is intercepted by Raja who demands the boy back. Raja refuses to believe that Selvam is Kannamma's son and abuses Kannamma for her shameless life. Ramalingam observes that even in such a humiliating situation, Kannamma is silent and does not breathe a word about her promise to him. He is moved and acknowledges her as his daughter-in-law. Selvam is united with his parents, and Raja's marriage with Maduram is cancelled.

• Gemini Ganesan as Rajalingam
• Savithri as Kannamma
• Kamal Haasan as Selvam
• T. S. Balaiah as Ramalingam
• S. V. Subbaiah as Murugan
• Devika as Maduram
• Javar Seetharaman as Singaram
• Manorama as Amalu
• 'Kuladeivam' Rajagopal as Rathnam

Originally, T. Prakash Rao was the director of the film. While AVM Productions paid its directors salaries ranging from ?15,000 to ?20,000, Prakash Rao charged ?40,000. Producer M. Saravanan discussed this with his father A. V. Meiyappan, who approved as he did not want to stand in the way of Saravanan's enthusiasm. Prakash Rao had directed "nearly half the film", but because Meiyappan and he "didn't see eye to eye", the entire film was re-shot by A. Bhimsingh. Although Meiyappan offered to retain Prakash Rao's name in the credits, he declined. The film was written by Javar Seetharaman, and is loosely adapted from the Moral Rearmament Army's play The Forgotten Factor. While Gemini Ganesan and Savitri were cast in the lead roles, Kamal Haasan – who was then a child – was cast in the film, making his cinematic debut. The original choice for Haasan's role was Daisy Irani, who had already been paid ?10,000 in advance. S. P. Muthuraman, who later became a leading director in Tamil cinema, made his debut as an assistant director in this film. Gemini Ganesan was paid a salary of ?75,000 (equivalent to ?4.8 million or US$72,000 in 2017).

There have been varying accounts regarding Haasan's entry into this film. In 1997, V. S. Srinivasan wrote for Rediff that young Haasan accompanied a doctor who went to treat an ill woman at the home of Meiyappan. On hearing loud shouting from a first-floor tenant of the bungalow, the doctor became uneasy. Haasan strode up the stairway to ask the noisemaker not to shout over the phone as someone was ill, leaving the person astonished. An impressed Meiyappan later provided him an entry into films. However, other sources state that when Haasan accompanied a family doctor of Meiyappan to his house, Meiyappan's son, producer M. Saravanan noticed Haasan as a hyperactive child. He took him over and introduced to Meiyappan who was looking for a young boy to act in Kalathur Kannamma. According to film critic Naman Ramachandran, Meiyappan cast Haasan after being impressed with his impressions of actors M. G. Ramachandran and Sivaji Ganesan, and his performance of a song from Chalti Ka Naam Gaadi (1958). The first shot filmed on Haasan was a scene featuring Savitri's character feeding him upma. Haasan held on to the upma in his mouth until the shot was done. He had not swallowed it. After the shot, he ran out and spat the upma, believing it to be fake. He refused to believe that the upma was real until after Muthuraman convinced him. The final length of the film was 17,570 feet (5,360 m).

The music of the film was composed by R. Sudharsanam,^[25] while the lyrics were penned by Kannadasan, Kothamangalam Subbu, Ku. Ma. Balasubramaniam, M. K. Athmanathan and T. K. Sundara Vathiyar. The playback singers were C. S. Jayaraman, T. M. Soundararajan, A. M. Rajah, S. C. Krishnan, M. S. Rajeswari, Jikki, A. P. Komala and P. Susheela.^[26] For the song "Arugil Vanthaal", Kannadasan came up with 56 pallavis.^[27] The song "Aadatha Manamum" is set in the carnatic raga known as Gourimanohari.^[28]

The soundtrack received positive response, with major praises for the number Ammavum Neeye.^[29] Film historian B. Vijayakumar said "One stand out sequence in Kalathoor Kannamma is the song pictured on Kamal. The song, ‘Ammavum neeye’... by M. S. Rajeswari and Kamal's acting made it an unforgettable experience".^[30] A report from The Hindu described the song's verses as "immortal".^[31] The Times of India said, "Ammavum Neeye Appavum Neeye... — this is a line that'll forever remain etched in the memory of Tamil cinema fans."^[32]