Jim Craig ( Tom Burlinson) and his widowed father Henry live by themselves in southeast Australia's mountainous Snowy River country. Desperate for money and unwilling to lave the high country to find work, they decided to capture a mob of local brumbies (wild horses) led by an old thoroughbred to sell. While constructing a corral to capture them, the brumbies stampede. Jim's mare runs off, and Henry's gelding startles, causing the log is was hauling to crush Henry, killing him.
After burying his father, Jim is run off his land by a group of local mountain men who claim he has to earn the right to live with them in the mountains. With no horse and nowhere to live, Jim goes to see Spur ( Kirk Douglas) an old one-legged miner and friend of Henry. Spur gives Jim a horse and advises him to go down to the flats to find work.
In town, Jim happens upon Harrison ( Kirk Douglas), a rancher, and is startled to discover that he is Harrison's (previously unmentioned) twin brother. Harrison is in town to take possession of a colt worth 1,000 pounds; the last colt sired by Old Regret, a mare that won the Melbourne Cup. When the colt is unloaded from the train, it starts bucking, tossing it's handler to the ground. Jim rushes in and calms the colt, to the irritation of Jessica ( Sigrid Thornton), the unlucky handler and Harrison's daughter. A friend of Harrison's, A. B. 'Banjo' Paterson, thanks Jim and manages to get him a job as a hand on Harrison's cattle station.
Jim begins working at Harrison's, where he quickly makes enemies with Curly, an older hand in charge of breaking in new horses. The entire station is preparing for the yearly muster, when the cattle are brought down from their pastures in the mountains. Clancy (Jack Thompson), a legendary stockman and friend of Henry's, arrives to help with the muster, and his familiarity with Jim exacerbates Curly's enmity.
While the other hands depart for the muster, Jim is left behind to handle chores and watch after the women on the station. Jim and Jessica slowly start to become friends, and Jessica lets slip that Curly will be in charge of breaking the valuable new colt. Jim, disgusted by Curly's cruelty, declares he can do better. Jessica takes him up on his boast, and they begin secretly breaking in the colt, a process that brings them even closer together. Jim breaks the colt and his riding it when the brumbies show up again. Attempting to chase them to recapture his mare, Jim is thrown from the colt and injured.
Jessica and her aunt decide to conceal the truth from Harrison to protect Jim's job, and Harrison orders Jim to go up into the mountains to retrieve a few stray cattle. While he's away, Harrison discovers that Jim broke the colt without his permission, then risked the valuable horse to retrieve his nearly wrothless mare. Harrison declares that, when Jim returns, he'll be fired, and Jessica will be sent to a boarding school. Furious, Jessica takes her horse and runs away to join Jim in the mountains.
Jessica is caught in a sudden storm and loses her horse while slipping onto a cliff side. Jim finds her horse and sets out to find Jessica. They reunite, Jessica explains the situation, and they kiss. Determined to finish the job he was given, even if he will be fired, Jim leaves Jessica with Spur while he gathers the remaining cattle. In the meantime, Spur has finally struck gold after years of searching. Since Henry Craig was his partner, Jim has inherited his share. Spur reveals to Jessica that he is her estranged uncle (Harrison had kept his existence a secret), and takes her back to the station.
At the station, Harrison fires Jim and warns him away from Jessica, telling him that he is not good enough for her. Spur confronts Harrison, and Jessica's aunt tells her the story of the brother's feud. Spur and Harrison both fell in love with Matilda, Jessica's mother. Matilda decided that she would marry whoever made his fortune first. Harrison wagered everything he had on a horse named Pardon in the Melbourne Cup, while Spur left mine for gold. Later, Spur gave Matilda a horse as a wedding present, the first foal from Old Regret, but Harrison, mad with jealousy, drove it off, and it became the leader of the brumby mob. Spur, seeing the horse in the wild, visited Jessica's mother out of concern, and Harrison shot his leg off with a shotgun.
As Jim gathers his things to leave, he gets into a fight with a drunk Curly and his mates. Another hand warns Curly off with a rifle, and Curly lets the colt loose, intending for Jim to be blamed for it.
A little while later, Jim and Spur are camping out when Clancy arrives and lets them know that the colt has been let loose and that Harrison is organizing a search party and a reward. Jim, already angry at Harrison, is further upset to learn that he is being blamed for the colt's disappearance. Clancy and Spur gently tease him, and goad him into going back to the station to clear his name. Realizing that the only way to prove his manhood and regain his honor is to return, Jim grudgingly rides back to the station.
Predictably, Harrison refuses to let him ride, but Clancy insists. The assembled stockmen give chase and locate the brumbies in the mountains. The old thoroughbred leads the mob down a treacherous descent, and all the riders give them up for lost, except for Jim, who makes a suicidal run down the hill with his mountain-bred horse. While the other riders turn back to the station ready to concede defeat, Jim continues to chase the mob, eventually staring down the old thoroughbred herding the entire brumby mob back to the station.
Jim returns Harrison's colt but contemptuously refuses the reward, declaring "that's not why I rode." As he turns to go, Jim tells Harrison "there's a few good broodmares in that mob. I'll be back for them. And whatever else is mine." He then rides home to his cabin in the mountains, having finally earned the right to be there.
References to the poem
Harrison's friend, the lawyer A.B. 'Banjo' Paterson, is a fictionalized version of the actual author, and the film contains many references to Paterson's poem "The Man from Snowy River," as well as his other works. The rider in the poem is unnamed, although Clancy and Harrison both appear in it. Clancy is also the titular character of Paterson's "Clancy of the Overflow," and Harrison is briefly mentioned in "Old Pardon, Son of Reprive." Jessica's mother, Matilda, is likely a passin reference to "Waltzin' Matilda," although the phrase refers to backpacking, rather than an actual woman.
The poem "The Man from Snowy River" is regarded as a classic in Australia, and an image of the daring rider and the text of the poem appear on the Australian ten dollar note.
The film's theme song was used in the opening ceremony of the 2000 Sydney Olympics, along with a massed team of riders, to showcase Australia's frontier and equestrian heritage.