In the opening scene, two bored highway patrol officers are parked behind a sign, desperate to arrest someone. Mick Taylor (John Jarratt) drives past and they pull him over, claiming he went over the normal speed though their radar proves he is under the speed limit. When he receives a speeding ticket, Mick vengefully murders both cops and torches their car.
Young German couple Rutger and Katarina (Phillipe Klaus and Shannon Ashlyn) hitch a ride to Wolfe Creek Crater and camp nearby. In the middle of the night, Mick is driving nearby and sees their tent in the distance. While Rutger and Katarina flirt, Mick drives up to the tent and offers them a lift so they don't get charged by the authorities for camping in a national park. When his plan fails, Mick loses his temper and attacks them, decapitating Rutger. Katarina faints and later wakes up to see Mick cutting up Rutger's body and flees into the bush, pursued by Mick.
British surfer Paul (Ryan Corr) is driving along the highway when he sees Katarina standing on the road. He lets her into the car, but Mick gives chase in his truck and eventually shoots Katarina dead. Paul manages to escape. The next day, Paul reaches the highway, but realises he has little fuel left in his car. He sees a semi-trailer in the distance, but realises Mick has hijacked it. Paul eventually manages to evade Mick by driving off the road and down a steep hillside. Mick vainly attempts to finish Paul off by allowing the semi-trailer (without him in it) to crash down the hill, but Paul flees.
After some time, Paul comes upon an outback cottage and is given hospitality by elderly couple Jack and Lil (Gerard Kennedy and Annie Byron). They plan to take Paul to the police, but Mick intrudes and shoots both Samaritans with Jack's own gun. Paul flees for his life while Mick gives chase on a horse, later succeeding in capturing Paul.
Paul wakes up in Mick's dungeon, tied up to a chair. Before Mick can torture him, he makes a reference to British wit. Paul decides to tell some jokes that manage to win Mick over. Impressed, Mick says he will let Paul go if they have an Australian pop quiz. The torturous "game" ensues, in which Paul loses two fingers after failing to give correct answers. When faced with the final question in regards to a famous Australian cricketer, Paul hits Mick with a claw hammer, before giving the correct answer: Donald Bradman.
Paul flees the dungeon and an injured Mick gives chase through the lair. Paul comes across several dead bodies of tourists and finds a woman, who is still alive. He says he will get help, but reaches a dead end. Mick releases his dogs, ordering them to find Paul. As they run towards him, Paul unknowingly activates a trap door, sealing himself from the dogs, who run away. Paul finds a blanket which is covering a Punji stick trap. Paul considers trying to jump over the deadly trap, but hears someone coming and hides behind a corner. When the person walks past him, Paul hits them with the claw hammer and they fall into the trap. Paul realises it isn't Mick, but the woman from before. Mick finds Paul and, after declaring himself "the winner", head-butts Paul unconscious.
Later, Paul wakes up on a footpath in a small town, wearing only his underpants and with wounds all over his body. He finds a piece of paper near him which reads "Loser". A series of title cards reveal that despite reporting a crazed gunman, Paul was charged with the murder of several tourists and during the court case, he suffered a complete mental breakdown. Paul was subsequently deported back to England and committed to an asylum.
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