The film begins in the midst of a shootout, where four men and two prostitutes are being shot at in a shed. Mikey Burns (Richard Wilson) is shot in the arm and his brother Charlie (Guy Pearce) comforts him while continuing to fire at the invading force outside. The third man fires wildly and goes outside, where he is shot to death. The fourth man is shot through the throat. Next, we see Mikey and Charlie in shackles and seated at a table with Captain Stanley (Ray Winstone). Mikey is clearly more afraid of what is happening, and we see that Stanley has had his men put the corpses of the prostitutes and the two other men against a wall. Stanley asks if he needs to introduce himself, but Charlie says that he already knows who he is. He asks that his brother receive some medical attention, but Stanley refuses until after their conversation and pistol whips Mikey in the face. Charlie threatens that hell kill Stanley if he touches his brother again. Stanley says that hes been in the company of bad men all his life, and that he plans to civilize the Australian hell-hole that they all reside in. He also mentions how disgusted he is at the Burns crimes, most notably the rape and murder of Eliza Hopkins, along with her family. Stanley mentions that come Christmas day, Mikey will be hung until he dies. He then offers Charlie a proposition he will grant him and his brother pardon from their heinous crimes in exchange for Charlie killing their older brother, Arthur. Stanley knows where Arthur is, but all of his men and slaves would not dare to seek him out. Charlie reluctantly agrees to it, and Stanley grants him nine days to kill Arthur.
Mikey is brought into town with another bloodied prisoner, where children throw rocks at them while they are chained to their cage. Stanley announces that he has captured Mikey Burns, who is promptly thrown out of the cage and into the prison cell (which is comprised of sand and bars). There is no ceiling, and the officers throw Mikey a bucket for toilet and a newspaper to read. Mikey instantly heads for the corner and cowers in fear. Charlie rides on a horse and stops upon seeing the grave of Eliza Hopkins. He gets off his horse and enters her burned down house, where he enters the bedroom and finds the empty cradle. It is revealed that Eliza was pregnant when the Burns gang raped and killed her. He continues on his way to find Arthur.
Meanwhile, we follow Martha Stanley (Emily Watson) around town. She goes to the jailhouse, where Stanley is surprised to see her. He orders his men to leave them. Martha says that she was lonely and worried all by herself, since Stanley has been gone for three days. He assures her that everythings fine, and tells her to go back home. Martha sees Mikey and asks who he is, since hes so young. One of Stanleys men says that hes young enough to be a man. When Martha asks him what he means, Stanley gets another officer to escort her home. After she leaves, Stanley chastises his man for talking to his wife about their police business. At night, Charlie drinks alcohol and stares up at the stars in the sky (as does Mikey in his cell). Also that night we see Stanley and Martha at home. Stanley sits by a window, shotgun in hand, while Martha asks him to come to bed. They lay down together and she says that she can carry some of the burden that he has.
The next morning, we see that Stanley went back to the window and fell asleep keeping watch. A gunshot is heard and Stanley panics, running into the door. He tells Martha to stay in bed and he goes to the jailhouse, where one his officers accidentally shot off his toes with his shotgun. Martha comes and sees this, and Stanley orders her to go home. Charlie rides to a bar located near some hills. He walks inside and finds a bartenders corpse rotting behind the bar, with flies swarming around him. Charlie takes out his pistol and takes aim when he hears a noise. Its Jellon Lamb (John Hurt), the other drunken bartender. Jellon is extremely happy that someone finally pulled into the bar, because the only company hes had is the corpse behind the bar. He talks about Darwin, and how he thinks we are all equal and have the same ancestors (apes). He laughs about this and keeps on mentioning that they are white men. He pours Charlie a drink but says that he wont drink with someone without knowing their name. Charlie gives Jellon a fake name and they drink. Charlie asks Jellon why hes out here, and Jellon asks him the same. Charlie grabs his throat but Jellon pulls out a blade and threatens to slit his throat. Charlie backs down, and Jellon goes to the window, where he talks about Arthur Burns. Its said that he lives in the hills like an animal, and that he cant be killed or captured. He turns around and is promptly knocked out by Charlie.
Stanleys men taunt Mikey with Christmas songs and sing about how they are going to hang him. Eden Fletcher (David Wenham), Stanleys supervisor, shows up to the jailhouse and studies Mikey. He calls him a little piece of filth and tells Stanley that he wasnt exactly the one they were looking for. Stanley assures him that in the end, justice will be done. Fletcher asks if Mikey has said where his other brothers are, and Stanley tells him to leave police work for policemen. Fletcher leaves. Stanleys men, during their break, drink and talk about Stanley. They mention that hes starting to lose it, and they all agree that they want to have sex with Martha. One of Stanleys men says that Stanley has had a lot on his mind so far, and talks about the proposition he gave Charlie Burns (which was not known to the others nor Fletcher).
Charlie camps out in the desert at night, and dreams of Arthur. When he wakes up, he finds that his horse has been killed. He pulls out his pistol and walks around. A spear is thrown through Charlies chest, fully impaling him. He coughs out blood and looks up at the group of savages who killed his horse. The savage who threw the spear has his head blown off. We next see a woman healing up Charlies wound while a man sits close-by, obviously worried about Charlies condition. Eventually, Charlie gets up and walks around the hills. Arthurs gang (comprised of two men and a woman), welcome him back and one of the men talks about blowing the head off the savage. He tells Charlie that hes going to keep his shotgun, but Charlie hits him and claims it back. He walks to the edge of a cliff, where Arthur Burns (Danny Huston) is seated, watching the sunset. Hes glad that Charlies back, and asks him about Mikey. Charlie lies and says that Mikey found himself a girl. When Arthur asks him questions about the girl, Charlie says that hes tired. Arthur says that he knows why hes back, and tells him that family is family (unaware of the real reason). Arthur stands up at the edge and Charlie says that Mikey looked up to him, and he remembers a time when he looked up to Arthur as well. Charlie stands behind his brother and has the opportunity to kill him, but doesnt take it. Arthur turns around and says that hes glad Charlies back. They retire for the night.
During this time, while Stanley is at home and is ready to eat a meal provided by Martha, an officer comes by and says that they just captured a group of blacks. They killed one in the process, and he felt Stanley should know about it. Stanley goes to the jailhouse, where he enters a room that has about six black people chained up. He orders an officer to keep the door open, since they all stink. He has his black servant/translator talk to the blacks about where they were hiding. One of them says that they werent hiding, and that they live near the hills. An officer threatens to blow his head off, but Stanley orders him to wait outside. Stanley asks the captured men if they saw Arthur out there, and they reply that hes a dog.
Meanwhile, Martha keeps on getting dirty looks while walking around town. She goes to the butchers and asks that they save a turkey for her. They agree and Martha asks them if somethings wrong. They say that she should ask her husband, and later on Martha does at home. Stanley keeps on wanting to keep Martha out of his work business, but admits that the boy in jail is Mikey Burns. Martha breaks down, because she knows that the Burns killed Eliza Hopkins (who was Marthas friend), and Stanley apologizes. Fletcher arrives and wants to speak with Stanley. He found out about the black men captured and the one killed during the process. Fletcher says that if they are going to kill one, they might as well kill them all (since they would want retribution and will kill an officer in retaliation). Stanley says that he will send off a group of his men in the morning. Fletcher then asks him if its true that he made a deal with Charlie and let him go. Martha comes in and offers them tea. After she leaves, they continue their conversation. Stanley says that Arthur is the leader and perhaps forced his brothers to take part in the Hopkins slaughter. Fletcher wants Mikey flogged/whipped 100 times. Stanley says that it would kill him, but Fletcher doesnt care. He then asks what happens when Charlie returns. Fletcher says that if he should return, he will be killed as well. Stanley goes to the jailhouse, where his officers are taunting Mikey with chairs and whips. Stanley gets after them and sends some off to kill the remaining black people living near the hills. Mikey asks where Charlie is, but Stanley doesnt know. He drinks alcohol and keeps watch all night.
The next morning, Stanley is awakened by the sound of a mob outside. They want Mikey to be whipped, but Stanley locks the door to the jail and threatens to shoot anyone who touches Mikey. Fletcher shows up and asks if he is willing to shoot his own wife (Martha is also present in front of the jail). Stanley drops his keys to the ground and allows the mob to take Mikey. They tie him up and proceed to brutally whip him while all the townspeople watch. Meanwhile, one of Arthurs men sings to the gang while they all rest (completely unaware of Mikeys flogging taking place). Eventually, the officer whipping has to wring out the blood from the whip and continue to administer the punishment. By the time they get to 40, Mikey is not even conscious and is a bloody mess. Even the townspeople are disgusted by the brutality, with some people walking away or looking away. Martha nearly faints but is caught by Stanley. Fletcher says that they should continue to whip him, but everyone knows that this kid has had enough. Stanley gives the whip to Fletcher, who shoves it on the ground and says that they are finished. The doctor treats Mikeys wounds in jail.
That night, Stanley tries to get Martha to eat something but shes still shocked at what she saw earlier. Meanwhile, Stanleys men arrive at the place near the hills that the blacks live and slaughter them all. Arthur and his gang hear the gunshots, but Arthur tells them that the shots are far away. After the killings, Stanleys men get drunk and pass out. While Charlie rests and gets healthy, Arthur keeps watch all night across the canyon. The next morning, he suddenly freaks out and starts to burn everything along with his gang. He knows that Charlie lied about Mikey and rides off with one of his men. An officer takes a piss outside the nearby bar when he is surprised by Arthur and his man. He says that if he fires, it will alert the others. Arthur agrees and pulls out his knife. He shoves the officer into a barn and steps on his throat. The officer tells him that Charlie came back to kill him and says that he can help him. Arthur stomps on the officers throat and head until he dies. He then kills the other officers and rides off to the hills.
Charlie is surprised by Jellon, who ties a rope around his throat and around his hands. Jellon says that before he was drunk and wouldve lost in a fight, but now hes sober and knows who Charlie really is. He throws Charlie down next to Arthurs other man (whos also tied). Arthur and his man show up, shooting Jellon in the stomach. Jellon drops to his knees and Arthur shoves him on his back. Arthur talks about how lonely it must be to die alone and talks about the importance of family. He says that Jellons not a part of his family, and frees Charlie. Arthur slowly stabs Jellon through the chest while he wails in pain. Charlie tells him that hes had enough, but Arthur wont stop. Charlie grabs a gun and points it at Arthur, who asks why he could never stop him. Charlie shoots Jellon in the forehead, killing him. He then reveals to Arthur that Mikey is going to be hanged on Christmas, and says that he has to ride off. Arthur asks him when Christmas is, but Charlie leaves.
While taking a bath, Martha tells Stanley about a dream she had. Eliza Hopkins came up to her, her dress torn and bloodied (along with her face), and gave her a bundle. When Martha looked into the bundle, she saw the baby and it grabbed onto her finger. Even when she woke up, Martha says that she could still feel the baby holding onto her finger. She asks Stanley what it means, but he doesnt know. Also during this time the doctor comes and visits Stanley, telling him that Mikey is dying from his wounds. Elsewhere, Arthur and his two men enjoy the sunset. His white man asks him what a misanthrope is, and his black man calls the white guy an idiot. Arthur tells him that a misanthrope is someone who hates the world. His white man asks him if thats what they are. Arthur says no, were family and they ride off to catch Charlie.
The next day Charlie, Arthur, and his white man ride into town wearing the clothes of the dead officers. They stripped their black gang member and tied him to their horse, pretending that hes their prisoner. They make it to the jailhouse, where they take the officers with ease and release Mikey. Charlie, Mikey, and the black member ride off while Arthur stays behind with his man. They take the officers to the cell and slash at them with knives. Arthur plans on getting even with Stanley later, and they leave. Fletcher later arrives at the jail and sees that the officers have had their heads cut from their bodies. Arthur and his man clean up, and Arthur tells him that hes proud of him.
Charlie cries over Mikey, who has died from the flogging. He buries him underneath rocks, and the black member says that its all Charlies fault since he left the gang. He leaves Charlie alone. Stanley sends his servant away and wishes him a merry Christmas. He gets ready to enjoy a feast prepared by Martha and carves the turkey. After they sit down, Martha prays that the Lord make them truly thankful for what they are about to receive. They drink and get ready to eat when Arthur and his man blast their way into Stanleys home. Stanleys shotgun is out of reach, and Arthur beats him on the head with his rifle. He throws Stanley into his office and orders his man to keep watch on Martha. Arthurs man eats some turkey and opens one of Marthas Christmas presents. Its a pair of expensive earrings (during this scene you can hear in the background Arthur beating Stanley in the next room). Arthur calls for Martha to be brought into the office, and they enter to find Stanley with an American flag wrapped around his head. Arthur makes sure Marthas watching, and then shoots Stanley through the shoulder.
Arthur removes the flag from his head, and wants him to witness what theyre going to do with his wife. Arthurs man throws Martha on top of a table and forces himself upon her. He punches her in the face and gets ready to rape her. Charlie shows up at the house and slowly makes his way into the office. He is disgusted by what the gang member is doing and blows his brains out. He then tells Arthur that hes had enough. Charlie shoots Arthur in the stomach. Arthur can barely believe it, but he is shot again in the chest. He stumbles out of the house, leaving Charlie alone with Stanley and his wife. Stanley, beaten and bloodied, starts eyeing a nearby pistol along with Martha. Charlie says that hes going to be with his brother and walks out the front door, where he follows Arthurs blood trail. Arthur is seated on the ground, watching the sunset. He says that Charlie got him, and Charlie tells him that Mikeys dead. Arthur then asks him what hes going to do now, and dies.
The film ends with Charlie staring at the sunset next to his dead brother.