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Chieftain Robert Roy MacGregor (Liam Neeson) arranges to borrow 1,000 pounds from the Marquess of Montrose (John Hurt) to finance a venture to buy and sell Highland cattle. He temporarily entrusts the money to his sub-chieftain Alan MacDonald (Eric Stoltz). However, Montrose's factor Killearn (Brian Cox) and his sociopathic protege Archibald Cunningham (Tim Roth) murder Alan and divide the money between themselves. MacGregor is now heavily in debt to Lord Montrose.

At a meeting to negotiate terms, Montrose agrees to write off the loss. In exchange, however, he orders MacGregor to testify falsely against the Duke of Argyll (Andrew Keir), saying he is involved in a Jacobite plot. Insulted, MacGregor refuses, saying that he considers perjury dishonourable.

Enraged, Montrose orders Cunningham to put MacGregor in debtor's prison. MacGregor menaces Cunningham with a sgian dubh, declaring that his father spent two years in the same prison over a nobleman's grudge. Montrose sends Cunningham with a small company of redcoats to hunt MacGregor down. The redcoats burn down MacGregor's farm and slaughter his livestock, and Cunningham brutally rapes MacGregor's wife Mary (Jessica Lange). Meanwhile, MacGregor's hotheaded brother Alasdair (Brian McCardie) arrives as Montrose's soldiers depart. After seeing Mary obsessively washing in the loch, he quickly realizes what has happened to her. Knowing that her rape was a calculated attack on her husband, Mary swears Alasdair to secrecy. Reluctantly, Alasdair agrees to keep silent.

Meanwhile, a girl from the MacGregor clan named Betty Sturrock (Vicki Masson) has been employed as a chambermaid at Montrose's estate. She is having an affair with Cunningham, but when Killearn informs Montrose of her subsequent pregnancy, he dismisses her from service. After seeking refuge with MacGregor and Mary at their new home, she reveals that Killearn and Cunningham had stolen the money and murdered Alan.

Determined to clear his name in court, MacGregor kidnaps Killearn with the intention of forcing a full confession of his part in the conspiracy. However, Alasdair returns with Mary and some unwelcome news: Distraut over being used and abandoned by Cunningham, Betty has hanged herself.

Mary asks to interrogate Killearn herself. However, the factor threatens to tell MacGregor not only of her rape, but of the possibility that she, like Betty, is carrying Cunningham's child. Enraged, Mary stabs the factor and Alasdair finishes the job by drowning him.

Unable to prove anything in court, MacGregor has no choice but to go back into hiding. During one of Cunningham's raids, Alasdair reveals where MacGregor's men are hiding by shooting one of the soldiers. Alasdair is mortally wounded in the subsequent pursuit, and with his dying breaths tells MacGregor about Mary's rape. Refusing to leave his brother, MacGregor is captured, and dragged in chains to Lord Montrose.

Face to face with his creditor, MacGregor accuses Cunningham of robbery and murder, something Montrose has already begun to suspect. He resolves to deal with MacGregor first, however, and sentences him to hang. At the last moment, however, MacGregor seizes the hangman's rope, wraps it around Cunningham's neck, and leaps off the bridge. In order to save Cunningham, Montrose orders the rope cut. MacGregor falls to the water and escapes.

Meanwhile, Mary has fled to Clan Campbell and revealed Montrose's plot against their Chief, the Duke of Argyll. Explaining that her husband is too proud to claim aid, she begs the Duke to take him under his protection.

Shortly thereafter, MacGregor makes his way to her croft. They at last speak of her rape, and possible impregnation, by Cunningham. She apologizes for her unwillingness to abort the child, saying she does not know who the father is. MacGregor responds, "It's not the child that needs killing."

Montrose and Argyll arrange a duel between MacGregor and Cunningham. When Montrose suggests that they wager on the outcome, the Duke offers only the following terms; if MacGregor survives, his debts are to be forgiven; if he dies, Argyll will pay his bill. Montrose smugly whispers, "My factor will call upon Your Grace's factor."

Cunningham sadistically toys with the weakened MacGregor, taking him apart cut by cut. Finally, unable to lift his sword, MacGregor is at his opponent's mercy. Cunningham looks toward Montrose, who nods his assent. However, as Cunningham prepares to deliver a lethal thrust, MacGregor seizes the sword point with his bare left hand and his claymore with his right, turning them both on Cunningham and eviscerating him. The Duke agrees to honor the bargain, and lets MacGregor go home to his family.

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