Australia's controversial policy of separating Aboriginal children from their families, known as the stolen generations, sets the backdrop for this poignant tale. In the lead-up to World War II, in 1939, Lady Sarah Ashley (Nicole Kidman) arrives in Australia with the intent to convince her unfaithful husband to sell their struggling cattle station, Faraway Downs, which spans Western Australia and the Northern Territory, reaching out towards the Timor Sea. To assist her, her husband sends The Drover (Hugh Jackman), a rugged cattle driver, to escort her to the ranch.
Upon her arrival, Sarah is shocked to discover that her belongings have been carelessly damaged by Drover, who was involved in a bar fight with the Carneys, a local family with a notorious reputation. King Carney (Bryan Brown), the powerful owner of all cattle ranches in Northern Australia, is eager to secure army contracts for beef supply, leveraging local manager Neil Fletcher (David Wenham), who has his own motives to pressure Sarah into selling Faraway Downs.
Tragedy strikes when Lady Sarah's husband is murdered, and local lore suggests that an Aboriginal elder, King George ([David Gulpilil]), is the alleged culprit. Fletcher secretly schemes to take over the ranch and sell it to Carney, aiming to monopolize the cattle industry. As the plot thickens, Sarah forms a connection with Nullah ([Brandon Walters]), a half-Aboriginal boy with a profound backstory, who reveals Fletcher's duplicitous plans after he overhears a conversation.
Sarah soon puts her assertive nature to the test by dismissing Fletcher, taking charge of the station with the help of her remaining staff, including an alcoholic accountant, Kipling Flynn ([Jack Thompson]), who informs her of Fletcher's deceitful dealings. As obstacles rise, including the impending removal of Nullah to a government mission that strips Aboriginal children from their families, Sarah nurtures a bond with the young boy, even singing the touching tune “Over the Rainbow” to comfort him.
Driven by the need to protect Nullah and salvage the cattle station, Sarah persuades Drover to team up with her. Together, alongside a support crew of Aboriginal riders, they embark on a formidable journey to drive their 1,500 cattle to Darwin for sale, facing numerous trials, including a tragic confrontation with fire set by Carney's men that leads to Flynn's demise.
During their expedition, an unexpected romance blossoms between Lady Sarah and Drover, deepening Sarah's appreciation for the rugged Australian landscape. Bonding over stories of loss and resilience, she reveals her inability to bear children, while Drover shares the pain of his past marriage to an Aboriginal woman who lost her life due to systemic healthcare neglect.
As external threats converge, Sarah's quest to adopt Nullah faces governmental resistance, rooted in colonial policies aimed at erasing Aboriginal heritage. Undeterred by a lucrative offer to sell her ranch from Carney, she solidifies her commitment to defend Nullah and her newly chosen family unit with Drover.
Two years of coexistence at Faraway Downs pass, filled with both joy and tension, as Fletcher, now a rival with newfound power, orchestrates a series of sinister moves to reclaim control. Manipulating circumstances to threaten nullah's safety, he reveals his dark past, ultimately sowing discord between Sarah and Drover. Faced with the ominous reality of World War II, Sarah's determination to rescue Nullah propels her into action.
As the Japanese forces invade, a desperate series of events unfolds where Drover leads a daring rescue mission for Nullah and the other children, while Sarah, resourcefully adapting to war efforts, works as a radio operator. Amidst chaos, sacrifices are made, including a noble act by Magarri, who enables the children’s escape at the cost of his own life.
As ships arrive post-attack, the poignant moment of reunion arrives, with Nullah playing “Over the Rainbow” on his harmonica, echoing the love that binds them. Tragedy strikes as Fletcher, engulfed in desperation following the devastation of his empire and losses in the war, attempts to harm Nullah, only to be thwarted by King George's bravery.
Finally, Sarah, Drover, and Nullah embark on a new journey home, reflecting resilience in reclaiming their lives at Faraway Downs. In a bittersweet farewell, Nullah embraces his heritage and returns to the Outback with King George, leaving behind a legacy of love and strength as Sarah and Drover look on, united in their new future.
