Plot

Two teenage girls share a unique bond: their parents, concerned that the friendship is too intense, separate them, and the girls take revenge.

Pauline Parker and Juliet Hulme met in school during the 1950s. Instant best friends, they proceeded to spend every minute possible together, often writing about a fantasy land of their own invention. More and more estranged from their respective families, the two girls realise that they are extremely different from most other people, and agree to take any steps necessary to ensure that they are not separated. The two families are increasingly concerned about the girls' friendship in a strictly moralistic era.—Murray Chapman <muzzle@cs.uq.oz.au>

In June of 1954, two teenage girls, both drenched in blood, run screaming through a scenic park. They burst into a tea shop and hysterically inform the startled owner that "Mummy" has been "terribly hurt."

In 1952, fourteen-year-old Pauline Rieper (Melanie Lynskey) is a student at a strict all-girls high school in Christchurch, South Island, New Zealand. She resides with her working-class parents, Herbert and Honora (Simon O'Connor and Sarah Peirse), whose home doubles as a boarding house. Introverted Pauline sleeps in a small furnished hut in the yard.

Pauline's life changes dramatically when she befriends wealthy British transfer student Juliet Hulme (Kate Winslet), the daughter of a respected physicist. Pauline's quiet nature is countered by Juliet's charisma and outspokenness, and the girls quickly become inseparable. Juliet is unafraid of authority, impressing Pauline by fearlessly correcting their French teacher during class and by ignoring their art teacher's instructions altogether. They are the only two girls in their class forbidden from taking part in gym activities, due to histories of bone disease on Pauline's part, and lung disease on Juliet's. They spend these class periods bonding over their passions for music, art, film, and literature. They create a fantasy kingdom called Borovina, about which they write stories, create models of the characters, and eventually interact with each other as the invented king and queen, Charles (Pauline) and Deborah (Juliet). They also elaborate on Juliet's theory of the afterlife, "the Fourth World," where they believe their favorite film stars and musicians will be saints. The girls hope to one day become famous actresses in America, and to have their stories about Borovina published.

Pauline begins to spend extensive time at the Hulme house with Juliet and her parents, Henry and Hilda (Clive Merrison and Diana Kent), and Juliet's younger brother Jonathan (Ben Skjellerup), even joining them on vacations. During this time, Pauline sees the dysfunction that exists within the Hulme family. Juliet has deep abandonment issues, stemming from her childhood when her parents left her in the Bahamas for five years to recover from a bout of illness. When Dr. and Mrs. Hulme mention they are planning a trip to London without their children, Juliet is very upset and becomes even more invested in her relationship with Pauline, continuing to construct an alternate reality of bliss and hopefulness that becomes increasingly real to both girls.

Shortly before her parents' departure, Juliet contracts tuberculosis and is sent to a clinic for four months. At the beginning of her stay, her parents, somewhat reluctantly, tell her that it's not too late to cancel their trip to London if she would prefer them to stay, but they quickly change the subject and bid Juliet a hasty goodbye. Juliet is miserable at being abandoned by her parents again, especially during another bout of illness, and remains angry until she is visited by Pauline and Honora. The girls are overjoyed to see each other again, although Honora appears slightly concerned about the intensity and closeness of the friendship. After the visit, Pauline and Juliet continue to communicate via frequent letters, detailing the lives of Charles and Deborah alongside their own.

With Juliet still recovering, Pauline begins to seek new experiences to fill the emotional void. She allows the persistent affections of John (Jed Brophy), an awkward young man boarding at the Rieper's house who claims to be in love with Pauline and comes to her room at night. Though Pauline is annoyed by his presence and is not attracted to him, she allows him to climb into bed with her. They are caught together by Pauline's father, who evicts John and is deeply upset by his daughter's behavior. Her mother is furious as well, calling her a "tart" who brings shame on their family, and forces Pauline to move back into the main house where she can be kept out of trouble. Pauline routinely sneaks out to see John, whom she calls "Nicholas" after one of her and Juliet's characters from Borovina, and consents to sex with him simply out of resentment for her parents.

When Juliet is well enough to return home, their relationship only grows in intensity. Juliet's father Henry is disturbed with the obsessive behaviors of the girls, and meets with Pauline's parents to reveal his concerns. Though he admits that he has seen no explicitly inappropriate behavior, he recommends that Pauline see a friend of his, Dr. Bennett (Gilbert Goldie), who has a background in child psychology. Honora agrees.

After interviewing a sullen Pauline, Dr. Bennett tells Honora that Pauline is likely going through a homosexual phase, but that it will likely wear off with maturity. With homosexuality being considered a mental illness at the time (not to mention the social implications from the largely Catholic community), the parents of the girls agree that the friendship must taper off.

Meanwhile, Hilda Hulme's affair with her marriage counseling patient, Bill Perry (Peter Elliott), is discovered by Henry and they agree to divorce. Henry resigns from his position as rector of the University of Canterbury and plans to move back to England. After receiving the news of her parents' separation, Juliet is told that she will be sent to live with a relative in South Africa. The Hulmes insist that the move is for the good of Juliet's health, as the warm climate will be easier on her lungs, but Juliet is heartbroken at the thought of leaving Pauline. Both sets of parents agree to let the girls spend three weeks together before the move. Pauline makes a desperate plea to her mother, begging to be allowed to go to South Africa with Juliet, but Honora refuses to consider it. Pauline begins to despise her mother for her role in breaking up the relationship, which had endured and blossomed for the past two years, and her thoughts turn violent as her time with Juliet begins to run out.

After viewing an Orson Welles film at the local cinema, Juliet and Pauline return home to Juliet's house where they finally consummate their feelings towards each other and make love for the first time. With their romantic bond cemented, Juliet and Pauline entertain a rather flimsy plan to run away together to America, but following the scheme's collapse, they decide to kill Pauline's mother to remove what they believe to be the chief obstacle to their fantasy life.

On June 22, 1954, they arrange an outing with Honora to Victoria Park, where the three of them stop for tea before going for a walk in the woods. After a bit of hiking, Juliet distracts Honora by discreetly dropping a pink gemstone onto the path and directing Honora's attention to it. While Honora is bent over examining the stone, Pauline extracts a brick in a stocking from her purse. She and Juliet take turns bludgeoning Honora until she is dead, and then run screaming, covered in blood, back to the tea shop where they tell the shopkeeper that Honora has been "terribly hurt" in an accidental fall.

The final scenes are a montage black and white fantasy segment of Juliet's parents taking her away on a ship while Pauline watches from the docks as she and her one true love, Juliet, are separated forever as a result of their murderous actions.

The film closes with an on-screen text saying that the girls' story of Honora's "accidental" death quickly dissolves, and both are arrested after police find Pauline's diary which explicitly outlined their murder plan. Pauline is charged under her mother's maiden name, Parker, after it was discovered that her parents were not legally wed. Being too young for the death penalty, Juliet Hulme and Pauline Parker were convicted of murder, served five years in prison, and were released in late 1959 under the condition that they never resume contact. Juliet returned to England with her mother, while Pauline remained in New Zealand until 1965 when she left for an unknown destination. They never saw each other again.