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Khan is a suave exiled Afghan prince living in India in the Monsoon Palace. He has a penchant for fine food and liquor, priceless jewels, "hunting" humans, and atomic weaponry. In the film, he associates with the power-crazed General Orlov in an attempt to unleash nuclear holocaust in Western Europe, by planning to detonate a nuclear bomb inside a US airbase, using his jewel smuggling partner Octopussy's Circus as a cover. The ensuing outrage at this "accident" will encourage NATO to abandon nuclear arms, and allow Orlov's armies to invade the West. In return, Khan gets valuable jewels stolen directly from the Kremlin.
Unfortunately for Khan, his activities catch the attention of British Intelligence, who send Agent 009 to investigate to East Germany. When 009 is killed by henchmen Mischka and Grischka, James Bond is sent instead.
After a humiliating defeat by Bond at backgammon, Khan tries multiple times to kill the spy. First he sends Gobinda in pursuit of him in a tuk tuk, only for Bond to outrun him. He then sends Gobinda to knock him out in his hotel room after sending Magda to seduce him, after which Bond is held captive in Khan's palace, only for him to escape through the jungle the next day. He then sends his henchman to raid Octopussy's palace after finding out that Bond is staying there, only for Bond to escape once more.
Bond pursues Khan from East Germany to West Germany, as he travels with Octopussy's circus. General Orlov is shot dead by soldiers when trying to cross the border into West Germany, while Bond manages to reach the circus at the American Air Force base to deactivate the bomb that Khan and Orlov had transported there. During the commotion, Khan's pay is lost in a car accident and confiscated by the KGB.
After Khan and Gobinda raid Octopussy's palace in India and kidnap her, they climb aboard Khan's plane. Bond jumps onto the outside of the plane and defeats Gobinda in hand-to-hand combat while Khan makes the plane do dangerous flips and turns in an attempt to kill Bond, who then detaches the fuel line causing the plane to nosedive, leaping off with Octopussy just as Khan desperately tries to land on a runway. Due to the runway being too short, Khan ends up going over a cliff and perishes when he crashes into the side of a mountain and the plane explodes.
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