The film opens at a function celebrating the launch of a book by Professor Siddharth Das (Rajendranath Zutshi). The professor donates a copy of the book to JC College. The college principal removes the book from the library and places it in an abandoned storeroom.

A group of close college friends all attend JC College: Manav (Sohail Khan) who has returned from America after four years, Shanti (Anita Hassanandani), Kabir (Alihassan Turabi), Akshay (Hiten Tejwani), Kabir's girlfriend Nupur (Divya Palat) and Talli (Vrajesh Hirjee). Manav is engaged to Shanti, who is a pure-hearted girl with a somewhat possessive streak.

The lives of these friends are changed when Disha (Isha Koppikar), an alluring young student, joins the college. Manav finds himself inexplicably drawn towards the new girl. Disha gradually develops a bond with Manav, much to the perturbance of Shanti. To reassure his fiancé, Manav explains that he feels strangely 'protective' of Disha but that his real love is Shanti.

Disha is invited to Manav and Shanti's engagement, where telekinetic events transpire—like a chandelier crashing unprovoked and almost fatally injuring Disha before Manav rescues her in the nick of time. When the group drives Disha home, their car collides with a disappearing ice wall and breaks down. The friends are then forced to spend the night at an old halfway house: Krishna Cottage.

The friends enter the long-abandoned cottage while Talli is asked to attend to the damaged car tire outside. In the cottage, uncanny events intensify; supernatural shadows and faces in curtains are seen, and Talli reports that all four tires of their car have exploded. Disha is also choked by an unseen assailant pulling on her necklace.

Manav takes off her necklace and gives it to her, and Disha throws him a strange look. She then explains that the spirit of her dead boyfriend, Amar Khanna, is responsible for all the mayhem. The friends are sceptical about her story and brush it off. They leave the cottage the following day, and Manav gives Disha his jacket, angering Shanti. Also, the friends discover that the car tires are no longer all damaged even though they were so the night before.

Meanwhile, Talli has a crush on Disha, and he follows her to the library, where Manav also meets her. Talli and Shanti eavesdrop on their conversation and discover that "Kahi Unkahi Baatein" is Disha's favourite book.

Talli gives the book to Nupur and requests her to read it, so he can pluck some select romantic lines from it and woo Disha later. Nupur reluctantly agrees and reads the book but is visibly horrified at its contents. On a call with Talli, she reveals the book contains eye-opening data about Amar Khanna. Before she can go into detail about it, the phone cuts off. Nupur is tormented by a mysterious force inside her house, which eventually sucks her head into a wall and kills her.

Meanwhile, at a cinema, Manav and Shanti fight over Disha again, and Shanti angrily insults Disha. Manav goes to console Disha and apologise on behalf of his fiancé, where she vents out her misery regarding Amar Khanna's death.

Shanti and the rest of the friends meet up later, and the boys rile her up and dare her to go to the college library alone at night. Talli goes to the college to scare Shanti, but while he is there, he overhears a conversation between Professor Siddharth Das (who wrote the book) and the college principal. The professor explains that "Kahi Unkahi Baatein" is cursed and cautions that it must be destroyed to prevent future tragedies.

Terrified of the situation's implications, Talli rushes to Nupur's house to retrieve the book and keep it back in the library. He cannot find her as she is dead and only manages to spot the book on the table. He takes it and meets up with Kabir.

Talli accidentally leaves the book in Kabir's car and calls and warns Kabir not to read it. However, Kabir's curiosity overwhelms him, and he reads it anyway. Following that, he is called by Talli, asking him to meet him at the empty college immediately. There, it turns out the 'Talli' calling him was a spirit, killing Kabir.

Talli, Shanti, and Akshay go to see Manav's performance, and Manav admits to Shanti that Disha has an oddly magnetic quality to her, but he is in love with Shanti only. The former part of the confession infuriates Shanti, and she drives away to confront Disha at her house. There, she is greeted by Disha's elderly mother who reveals that Disha has been dead for 22 years in a shocking turn of events.

In light of this new information, a bewildered Shanti flees in her car with Disha's ghost on her heels. She tries to communicate with Manav at his show but is distracted by a call from 'Nupur', only to discover she, and Kabir, are dead.

Shanti runs and faints in front of a shrine, and awakens at the home of a noted medium, Sunita Menon (Rati Agnihotri). Sunita performs a seance that invokes Disha's spirit. The spirit angrily exclaims about its quest for death.

Talli reads the book and learns that it is all about Krishna Cottage, but is murdered by Disha. Professor Das, who was in love with Disha burns the last few pages of the book and reminisces about Disha, but he dies of a heart attack before Manav and others could reach him. Manav discovers a body preserved in ice. The body bears an uncanny similarity to him; this brings back a flood of visions: Manav was Amar Khanna in his previous birth. He and Disha were students of JC College many years ago. They were very close friends, and Disha secretly pined for Amar. She proposed to him with a necklace at Krishna Cottage, but he rejected her advances by stating that their relationship is more than a friendship but less than love. Disha was crestfallen by his response.

One night, she knocked at Amar's door frantically and revealed that some men Amar had previously gotten into a fight with had been murdered. She claimed that Amar was the prime suspect in the case.

She convinced him to flee with her, and he agreed initially. But he changed his mind while in the getaway car and asked her to return. Disha refused, and they started quarrelling, when Disha's car's glove compartment flew open. Amar spotted a bloody weapon inside it, and he connected the dots that Disha must have killed the boys so she could convince Amar to live with her somewhere far away.

In the resulting altercation, the car crashed into the mountain, and Amar rolled into the snow, hit his head on a rock, and instantly died. Disha wept over his body and refused to leave, despite the pleas of the principal and the professor who had reached the site by then, till an avalanche buried her too. Disha has now returned as a spirit to reclaim her lost lover.

Sunita suggests the only way to stop Disha: Manav and Shanti must be married, as this bond is too strong for a spirit to break. The wedding ceremony commences that night. Disha's spirit attacks, throwing Sunita into the air, and she falls on a tree branch which impales her belly, killing her. Manav then agrees to go with Disha's spirit but says that while the spirit may claim his body, his heart belongs to his wife, Shanti, and he will gladly die for his true love. He jumps to his death, and Disha takes him in her arms. Manav wakes in a nearby cottage, surprised to be alive, and is told by the caretaker that a woman dropped him there. He reads a letter by Disha that appeared on the window, stating that she could not let his love become immortal, as her love is immortal, and she understood that his happiness lies with Shanti and the meaning of love is to give, not to take. She wishes him a beautiful life and that she will always be with him, not like a negative shadow but like fresh rays of sun shining on his face. Manav and Shanti live a happy married life.

• Sohail Khan as Manav / Amar Khanna
• Isha Koppikar as Disha
• Anita Hassanandani as Shanti (credited as "Natassha" in film credits)
• Rati Agnihotri as Sunita Menon
• Vrajesh Hirjee as Puneet "Talli" Kumar
• Divya Palat as Nupur
• June Malia as Disha's Friend
• Hiten Tejwani as Akshay
• Alihassan Turabi as Kabir
• Roopa Ganguly as The Nun of the church
• Rajendranath Zutshi as Professor Siddharth Das
• Rajendra Gupta as J.C. College's Principal
• Usha Nadkarni as Disha's mother

The film's soundtrack contains 7 songs composed by Anu Malik, Vishal–Shekhar (Hameesha Tere Saath) and Sandeep Chowta (Laila Laila and Rang Rang) . Lyrics were penned by Sanjay Chhel, Neelesh Mishra, Sameer, and Shekhar Ravjiani. The album was released on 9 February 2004.

Taran Adarsh wrote for Bollywood Hungama, "Krishna Cottage has its moments, but not enough to enjoy an innings like some of the films belonging to this genre".^[1] Shilpa Bharatan Iyer of Rediff.com wrote, "All in all a movie worth watching once -- if cheesy spook shows are your thing".^[2] Parul Gupta of The Times of India wrote, "Producer Ektaa Kapoor takes the horror film genre literally, making a film that's truly a horror to watch."^[3]

• Krishna Cottage at IMDb