Plot summary

Australia has the policy to separate aboriginal children from their parents to prepare them for a life in the white society. These are known as the stolen generations. In 1939, weeks before the start of World War II, Lady Sarah Ashley (Nicole Kidman) of England travels to Australia to force her philandering husband to sell his faltering cattle station, Faraway Downs. The huge station straddles Western Australia and the Northern Territory, reaching north to the Timor Sea. Her husband sends an independent cattle drover (he drives the cattle from point a to point b on commission), called "The Drover," (Hugh Jackman) to transport her to Faraway Downs. Sarah is mortified when she finds that Drover has destroyed her luggage (and flung her undergarments among the assembled crowd) during his bar fight with the Carneys..King Carney (Bryan Brown) owns every cattle ranch in Northern Australia and is vying for lucrative army contracts to supply beef to the troops. He has Neil Fletcher (David Wenham) on his payroll. Neil is the manager of Faraway Downs, but is secretly working for Carney to pressure Ashley's into selling the ranch to him.. Carney does not want a single cattle from the ranch to reach the wharf in Darwin.Lady Sarah's husband Maitland is murdered before she arrives; the authorities tell her the killer is an Aboriginal elder nicknamed "King George." (David Gulpilil) The station's manager, Neil Fletcher, secretly tries to gain control of Faraway Downs in order to sell it to meat tycoon Lesley 'King' Carney, thereby creating a complete cattle monopoly. Meanwhile, at Darwin, Australian Army logistics officer Captain Dutton (Ben Mendelsohn) negotiates beef prices with Carney on behalf of the Allies.The childless Lady Sarah is captivated by the boy Nullah (Brandon Walters), who has an Aboriginal mother and a white father. Nullah, who has been spying on Fletcher, reveals his plan to Lady Sarah. Nullah reveals to Sarah that the Billabong area has plenty bulls to breed her cattle, but Neils had told her that it is Carney property, which it is not. Neils tells Nullah to keep his mouth shut, but he resents being called a liar. She fires Fletcher and runs the cattle station with the help of her remaining staff. Kipling Flynn (Jack Thompson) is an alcoholic accountant of Faraway Downs. He tells Sarah how Neils sent all the fat cattle from the ranch over to Carney's property. Flynn wants Sarah to drive the cattle to Darwin to sell it to the army, but without Neils, there is no one to muster the cattle. This is where Drover steps in. Drover is pissed that Sarah fired Neils as he has released the cattle, with 1500 heads spread over a million acres. Sarah tells him how Neils was selling the best of the unbranded cattle to Carney.The next day, policemen arrive to take Nullah away to Mission Island as they have with other half-Aboriginal children. While evading them, Nullah's mother Daisy (Ursula Yovich) drowns when she hides with him in a water tower. Lady Sarah comforts Nullah by singing the song "Over the Rainbow." Nullah tells her that "King George" is his grandfather, and that like the Wizard of Oz, he too is a "magic man".Lady Sarah persuades Drover to take the cattle to Darwin for sale. They first round up the cattle where Drover teaches Sarah about Driving. Drover leads a team of seven riders, including his Aboriginal brother-in-law Magarri (David Ngoombujarra), Goolaj (Angus Pilakui), Nullah, Lady Sarah, Bandy (Lillian Crombie), and the station's accountant Kipling Flynn, to drive the 1,500 cattle to Darwin. Carney wants Dutton to sign the contract, but Dutton wants to wait as he has reports of 1500 cattle leaving Faraway Downs. Carney asks Neils to take care of it. Drover and team encounter various obstacles along the way, including a fire set by Carney's men that scares the cattle, resulting in the death of Flynn when the group rushes to stop the cattle from stampeding over a cliff. Lady Sarah and Drover fall in love, and she gains an appreciation for the Australian territory. The two share a romantic moment under a tree, where he reveals that he was once married to an Aboriginal woman who died after being refused medical treatment in a white hospital. As a result of being friendly with the Aboriginals, he is shunned by many of the other whites in the territory. Lady Sarah reveals she is unable to have biological children. Over the next few days, the team drives the cattle through the treacherous Never Never desert. Upon finally arriving at Darwin, the group races to load the cattle onto the ship before Carney's cattle in order to secure payment (Sarah offers to accept 20% less than what Carney is asking, but the contract is signed. Dutton says that the contract is not enforced till the cattle is loaded).Sarah wants to adopt Nullah, but nobody in the Govt supports this and they tell Sarah that it is the policy to separate aboriginal children from their mothers to breed the black out of them. Carney offers $75K pounds for the farm to Sarah, but she declines as she feels responsible for Nullah and her family. But that's when Drover decides to accept a job with Sarah as a manager of Faraway Downs and Sarah rejects Carney's offer. Lady Sarah, Nullah, and Drover happily live together at Faraway Downs for two years. Meanwhile, Fletcher manages to take over Carney's cattle empire after orchestrating Carney's death in an accident (Carney knew that Neils had killed Maitland and had threatened Neils to stay away from Catherine) and marrying his daughter, Catherine Carney (Essie Davis). He returns to Faraway Downs and threatens Nullah's safety unless Lady Sarah sells her cattle station. Fletcher intimidates her, revealing that he was the actual murderer of Lady Sarah's husband (not "King George") and that he is also Nullah's father.Nullah intends to go on a walkabout ( a rite of passage ceremony ) with "King George," much to Lady Sarah's dismay. Sarah wants to stop Nullah, but Drover tells her that he is an Aboriginal son and he needs to complete his ancestral rituals. She and Drover argue about what is best for Nullah, after which Drover leaves Faraway Downs to drive cattle for the army (Dutton offered him a 6 month contract which Drover accepts). Nullah is apprehended by the authorities and sent to live on Mission Island. King George is also arrested as the murderer of Maitland. Lady Sarah, who has come to regard Nullah as her adopted son, vows to rescue him. Neils tells Sarah that he arranged Nullah to be sent to Mission Island as that would be the first place the Japanese will hit when they attack Australia. As World War II escalates, she goes to work as a radio operator alongside Catherine. When the Japanese attack Mission Island and Darwin in 1942, Lady Sarah fears that Nullah has been killed. in Darwin, the prisoners are freed as the Japanese attack.Drover returns to Darwin after hearing about the attack and fears Sarah as dead as the army HQ is up in flames. He learns of Nullah's abduction to Mission Island, and goes with Magarri, Ivan, and a young Christian brother to rescue him and the other children. During the rescue the Japanese forces attack from land, Magarri sacrifices himself as a diversion so the others can flee. Meanwhile, Lady Sarah (who has survived the HQ attack and was taken to the local army hospital. Catherine was killed) and the other townsfolk are being evacuated South by Captain Dutton. Drover and the children sail into port at Darwin as Nullah plays "Over the Rainbow" on his harmonica; Lady Sarah hears the music and the three are reunited. Fletcher, distraught at his financial ruin (His ranches and storage stocks are destroyed) and Catherine's death during the Japanese attack, attempts to shoot Nullah with a soldier's rifle. As Lady Sarah and Drover rush to save Nullah, "King George" strikes Fletcher with a spear, killing him. Lady Sarah, Drover, and Nullah return to the safety of the remote Faraway Downs. Some time later, "King George" calls out to Nullah, who returns to the Outback with his grandfather as Lady Sarah and Drover look on.