The instant invention deals with the solution to technical flaws of existing vertical axis windmills in which the wind strikes simultaneously on inward and outward facing sides of rotor blades which reduce efficiency. Hence, this invention, i.e., the vertical axis windmill with wind guiding device, includes vertical plates which are fixed from the bottom of a base structure to the top of a rotor in an annular array. In between any two vertical plates, inclined plates are fixed from the bottom of the base structure to the top of the base structure. These plates are tilted towards the concave side of the rotor blades. The vertical and inclined plates are fixed in angular and radial directions so that whenever the wind blows from any direction, it gets compressed and then is diverted towards the wind receiving blades. Also the vertical plates protect the convex side of the rotor blades from wind while diverting the wind towards the wind receiving blades.