After saving a young boy from drowning and being awarded a "hero sash" when he was himself 10-year-old, Ned Kelly (Heath Ledger) grows up in the British colony of Victoria (Australia) where he was born. The son of a Catholic Irish settler, he lives with his widowed mother Ellen (Kris McQuade), his younger brother Dan Kelly (bushranger) (Laurence Kinlan), and her two younger sisters Kate (Kerry Condon) and Grace (Emily Browning). Ned's best friend Joe Byrne (Orlando Bloom) and Dan's best friend Steve Hart (Philip Barantini) are also often at the house. One day in 1871, when he's 17-year-old, he sees a white mare grazing alone in the outback. He rides it into town to impress a local girl named Jane, only to be arrested and subsequently imprisoned for supposedly stealing the horse, even though it had actually been stolen by an acquaintance of his, Wild Wright.