It's 1939 and Lady Sarah Ashley (NICOLE KIDMAN) isn't pleased that her husband spends his time raising cattle and who know what else on his ranch in Darwin, Australia, so she's headed there from England to shut the place down. When she arrives at the remote Faraway Downs, however, she discovers that her husband has been murdered and the ranch is in disarray.
Its manager, Neil Fletcher (DAVID WENHAM), claims aboriginal magic man, King George (DAVID GULPILIL), is the murder suspect. But Nullah (BRANDON WALTERS), Fletcher's illegitimate, half-white, half Aborigine boy and King George's grandson, claims his father has secretly been transporting the ranch's best cattle to rival cattleman King Carney (BRYAN BROWN) who wants to sell them and his herd to the Australian government via Captain Emmett Dutton (BEN MENDELSOHN).
Infuriated by that and his abuse of Nullah, Sarah fires Fletcher, a move that doesn't sit well with her drover (HUGH JACKMAN), particularly since it doesn't appear the likes of perpetually intoxicated Kipling Flynn (JACK THOMPSON) will be of much use to them in herding the cattle to Darwin. Besides, since Drover associates with aborigines such as Magarri (DAVID NGOOMBUJARRA), he doesn't have the best reputation among the town's elite or hired hands such as Bull (RAY BARRETT).
Nevertheless, Sarah convinces Drover to lead their ragtag group, including Nullah, in herding their cattle to Darwin. Along the way, the two must not only contend with Fletcher's attempts to sabotage them, but also a change in how they feel about each other, as well as the onset of WWII and the pending Japanese attack on Darwin.