Phar Lap, known affectionately as "Bobby" by his strapper Tommy Woodcock (Burlinson), collapses and dies in Woodcock's arms, at Menlo Park in California, in 1932. The news is greeted with great sadness and anger in Australia. The remainder of the film is done as flashback.
Five years earlier, Phar Lap arrives in Australia, purchased unseen from New Zealand. His trainer Harry Telford (Martin Vaughan) and Telford's wife Viwatch as he's lowered onto the wharf by sling. Mrs Telford comments that she "wonders what his (Telford's) American friend (owner David Davis(Leibman)) will think?". Davis is not impressed with the underweight, wart-ridden colt, calling him a cross between a Sheep dog and a Kangaroo, and orders Telford to sell him immediately. Telford protests, saying that the horse's pedigree is exceptional, with Carbine on both sides of his bloodlines. Davis agrees to lease him to Telford for three years, keeping only one third of the winnings, though Telford must pay for his upkeep.
As Phar Lap is brought into the stables, he and Woodcock form a strong bond. When the young strapper complains about how hard Telford works the horse, Telford sacks him. He has to reinstate Woodcock when the horse stops eating.
Phar Lap fails badly in his first few races, but Woodcock educates the horse by holding him back in trackwork, sensing that he likes to come from behind. This pays off at the 1929 AJC Derby run at the Randwick Racecourse, Sydney. The film shows this as Phar Lap's first win although his first was actually the RRC Maiden Juvenile Handicap in the previous racing season. The win saves Phar Lap from being sold and Telford from bankruptcy.
As the Depression bites, Phar Lap wins every race he enters. Davis attempts to capitalise on his success through shady betting schemes, something Telford wants no part of. In preparation for the Melbourne Cup, the premier race in Australia, Davis pressures Telford to scratch Phar Lap from the Caulfield Cup, to maximise Davis's betting returns. Under great financial pressure, Telford reluctantly agrees. As Woodcock walks the horse back from track work, someone tries to shoot the horse in the street. Woodcock and Phar Lap go into hiding at a stud farm outside Melbourne, arriving at Flemington Racecourse at the very last minute for the 1930 Melbourne Cup. Phar Lap wins, ridden by champion jockey Jim Pike. In the 1931 Cup, the VRC imposes an unprecedented weight of 10 st 10 lb (68 kg), "to better horse racing". Phar Lap surges to the lead but fades and finishes eighth, and the racing authorities face jeering crowds. The horse is now back under Davis's control, after the three year agreement runs out. Davis then offers half of Phar Lap's ownership to Telford for ₤20,000, for which Telford refuses. Telford then has an injury faked on the horse and hoodwinks Davis into thinking that the Red Terror is lame and agreeing to sell the half share for only ₤4,000. Davis realises he's been had when Phar lap easily wins his next race.
After the 1931 Melbourne Cup, Davis is approached by about racing Phar Lap in the Agua Caliente Handicap at the Agua Caliente Racetrack in Tijuana,Mexico. Davis, knowing that the horse would never be allowed to race fairly in Australia while being so heavily weighted and also knowing that Weight for Age races offered less prize money, agree's but has to convince Telford its worthwhile. Telford initially disagrees citing Australia's Quarantine Laws but reluctantly agrees after Davis convinces him of the financial windfall if Phar Lap wins. Telford, saying that it has brought him "nothing but trouble" refuses to go himself, preferring to concentrate on his new stud and stables at Braeside, south of Melbourne and promotes Woodcock to be Phar Lap's trainer knowing the horse wouldn't do anything without Woodcock there with him.
After arriving in the United States Woodcock soon clashes with Davis over the new trainers softer methods and sometimes non-cooperative ways, including taking Phar Lap away from a press conference and back to his stable before the conference was finished. Woodcock also doesn't listen to advice about different horse shoes to suit the different track surface and Phar Lap badly cracks his front right hoof further hampering his preparation for the big race. Before the race word gets out that some jockeys may have been bribed to keep him boxed into the rails during the race not allowing him to win and keep gamblers from losing large amounts of money so Davis instructs Phar Lap's jockey (Billy Elliot) to lead from the start. Woodcock immediately counters this by telling Elliot to run Phar Lap's normal race of starting slow and finishing fast. Using Woodcock's advice, Phar Lap wins the Agua Caliente Handicap in Mexico, blood streaming from a split hoof. He dies soon after, in suspicious circumstances.
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