Sakthivel (Kamal Haasan) returns home to his father Periya Thevar’s (Sivaji Ganesan) village in Tamil Nadu after completing his education in London. Much to his father’s annoyance, he brings his westernized girlfriend Bhanu (Gautami) with him to meet his family. Periya Thevar is deeply offended since it is a tradition that the family elders choose the youngster's spouses. To make things worse, Sakthivel reveals his plans on opening a chain of restaurants in Chennai which saddens Periya Thevar as he wanted his son to help the villagers improve their lifestyle with his level of education.

Periya Thevar is a well-respected village chief. His younger half-brother Chinna Thevar (Kaka Radhakrishnan) and nephew Maya Thevar (Nassar) hold a huge grudge against him over a falling-out. The entire village suffers from a spillover of this longstanding family feud as most of the village and its surrounding areas that fall within its jurisdiction is divided between the brothers. Since Maya Thevar always tries to one-up Periya Thevar, it puts them at loggerheads with each other.

Sakthivel spends time in the village with his girlfriend by revisiting his childhood memories. They come across an old temple which has been closed off on Maya Thevar’s instructions. He insists on entering, and his friend and servant Esaki (Vadivelu) breaks open the lock for them to look around. Maya Thevar hears of this, and a brutal riot is started between the two village factions. Periya Thevar, in order to quell the situation, contemplates on apologizing to his opponents. Sakthivel feels it should be him or Esaki who should apologize. When Saktivelu asks for Esaki, he learns that Maya Thevar has cut off Esaki’s hand as punishment for opening the temple. To prevent further escalation of the situation, Sakthivel, with permission from Periya Thevar, enlists the help of his friends in the government, and opens the temple for all legally. Slighted by this, Maya Thevar hires goons to break a dam protecting a part of the village faction that supports Periya Thevar. Although one of the villagers spots one of the goons near the dam, he does not think much of it.

The dam is damaged by explosives used by the goons which result in flooding of half the village. This results in numerous deaths including infants which deeply saddens Sakthivel. He spots the goon who placed the explosives again in the village and gives chase. After capturing, he hands the goon over to the police but the goon does not speak of Maya Thevar's involvement due to fear for his own family's safety.

Later Maya Thevar closes a portion of his land, preventing the public from reaching the main road easily. Sakthivel and Periya Thevar invite them for talks at village Panchayat to resolve the standoff due the riots and flooding. In the village panchayat, accusations fly from both sides. With no evidence backing up the truth, Maya Thevar accuses Periya Thevar of orchestrating various attacks on his brother's family. Disrespected and broken, Periya Thevar returns to his home and passes away due to a heart attack later that night. Sakthivel takes over his father’s duties as the head of the village.

As time passes, this incident dies down. The villagers express concern to Sakthivel about going around the piece of land belonging to Maya Thevar’s side of the village every day to work on their farm which causes a much longer travelling time. Sakthivel reasons with the landowner Paramasivam (Kallapart Natarajan) to open it up for all villagers to pass so that their long commute is shortened. Although understanding and willing, Paramasivam, who is actually Maya Thevar's maternal uncle, is afraid of Maya Thevar’s backlash, especially since he has a daughter Panchavarnam (Revathi). Saktivelu assuages his fear by arranging the marriage between a well-to-do person from his village to Panchavarnam. Everybody involved happily agrees and Paramasivam opens up the land for everyone.

On the day of the wedding, the groom runs away, fearing Maya Thevar. Paramasivam and Panchavarnam are distraught over this, claiming it is a huge disrespect to his family. He opines that even if someone marries his daughter, they have to live in constant fear. Sakthivel then gets permission from Paramasivam and weds Panchavarnam. Although Sakthivel still has feelings for Bhanumathi and Panchavarnam is very shy, they overcome their awkwardness and move on. Soon, Bhanumathi returns and learns the truth. Although saddened by the turn of events, she understands the situation and leaves. Sakthivel, too, closes the chapter about Bhanumathi and starts his new life with Panchavarnam.

Maya Thevar, agitated by the land opening, plants a bomb during the village festival. This results in deaths on both sides of the village. Both factions of the village, wanting revenge, go after Maya Thevar and his family. Sakthivel protects the innocent family and helps them get away from the villagers. Appreciative of Sakthivel's efforts to protect them, they give away Maya Thevar's hiding location.

Sakthivel goes to meet Maya Thevar and asks him to surrender to the police before the villagers kill him. Maya Thevar’s rabid hatred for Sakthivel makes him reject his offer of help. Maya Thevar, blaming Sakthivel for all his problems, tries to kill him. In the struggle that follows, Sakthivel accidentally decapitates Maya Thevar. Although other villagers are willing to take the blame for Maya Thevar's murder, Sakthivel gives himself up to the police, wanting to put an end to the cycle of violence once and for all.

Development

In the 1980s, Muktha Srinivasan planned to direct a film based on the American film The Godfather with Sivaji Ganesan and Kamal Haasan; however the project was dropped after Kamal Haasan's then associate Ananthu felt that it would be a Ganesan-focused film and not a Kamal film. Kamal later wrote a script (which eventually became the film Thevar Magan) in seven days, although he claimed he was challenged to write it in 12. The film was initially titled Nammavar before being retitled as Thevar Magan. Kamal also acknowledged it as being inspired by The Godfather and the Kannada film Kaadu (1973). He approached Malayalam filmmaker Bharathan to direct Thevar Magan. This was Bharathan's last film in Tamil. According to Kamal Haasan, it was the first film which was written using a screenwriting software called "Movie Magic". Lyricist Gangai Amaran claimed in 2016 that he was supposed to direct a film titled Adhi Veerapandian starring Kamal Haasan, but music director Ilaiyaraaja advised Kamal against accepting the film, feeling that Amaran was "not a good filmmaker", and the film was shelved. Amaran recalled, "Kamal took the story of Adhi Veerapandian and remade it as Thevar Magan".

Casting

Kamal has stated that the casting was done "against everyone else’s suggestion". Vadivelu was recruited to play the character called Isakki. Meena was approached to play the character Panchavarnam and she had acted for few days but due to date problems she was replaced by Revathi. S. N. Lakshmi was chosen to portray Nassar's mother. Gauthami acted as love interest of Kamal in the film. Dubbing voice for Gauthami was provided by K. R. Anuradha. Thalaivasal Vijay portrayed Kamal’s elder brother and Ganesan’s son in the film. It was Kamal who recommended Vijay for the role. For the character looks in the film, Hassan wore colourful buttoned up shirts and jeans with medium size beard and mullet in the first half of the film and he spotted thick Handlebar moustache and wore six yards of village dhoti for the part of village head. The unit had originally wanted to cast either Vijayakumar or S. S. Rajendran for the character of Kamal's father. However Kamal approached Sivaji Ganesan who completed his portions within 7 days.

P. C. Sriram and N. P. Satish took care of cinematography and editing respectively. Cameraman Tirru worked as P. C. Sriram's assistant and actor Tinku worked as assistant photographer respectively.

Filming

The film was entirely shot in Pollachi at 75 days and for few days at Chennai and Ooty. The scenes were shot at palatile bungalow situated at Singanallur. Kamal has stated that the scene where a truck, with a cargo of steel rods jutting out, reverses and rams into a car in the film was initially written for Nayakan (1987), but could not be used there since producer Muktha Srinivasan would not let a car be demolished. The unit went for shooting without a final script to Pollachi. The shooting could not proceed as planned due to confusion. Famous screenwriter Kalaignanam came to help and given the concept of "one temple, two locks" which Kamal liked. Some scenes were shot at Mariamman Temple at Sulukkal, Pollachi.

Rajan Krishnan, PhD scholar in Film Studies from Columbia University, says that it was Kamal Hassan who brought that sickle bearing genre. He says, "I would like to propose that it is a Kamal Hassan film of high authenticity markers called Thevar Magan that can be said to have inaugurated the era of the south being represented as primarily a sickle bearing space".

Stalin Rajangam, writer, who has extensively written on the ‘caste component and narrative structures of Tamil films concurs. He says that "Thevar Magan was first of its kind with stronger idioms of caste and glorification of caste-based practices". Tamil writer S. Ramakrishnan said that Thevar Magan captured "the very essence of the south Tamil Nadu’s rural culture".

The film faced controversy for identifying the Thevar community with glorified violence.

The film was chosen by India as its entry for the Best Foreign Language Film for the 65th Academy Awards, but was not nominated. The film was screened at the Toronto International Film Festival in 1994. Ilaiyaraaja was a strong contender for the National Film Award for Best Music Direction, which he eventually lost to A. R. Rahm