Virgil Cole (Ed Harris) gets Randall Bragg (Jeremy Irons) convicted of the murder of Marshall Jack Bell (Booby Jauregui) and his men. When the train that Virgil and Everett Hitch (Viggo Mortensen) are taking with Bragg from Appaloosa to the town where Bragg will be hanged stops momentarily, the Shelton Brothers appear with Allison (Renee' Zellweger) as a hostage. Virgil is forced to let Bragg go and after Everett returns from Appaloosa with horses, Everett and Virgil track the Shelton Brothers and Bragg in order to retrieve Allison.
While spying on Bragg from a distance, Virgil spots Allison and Ring Shelton (Lance Henriksen) frolicking naked in a stream. When Indians attack, Everett and Virgil drive them off and the group forms an uneasy truce. Everett trades Bragg's horse with the Indian leader for Allison's corset and the Indians depart.
When they reach town, Bragg is locked up in jail and Virgil and Everett plan a showdown with the Shelton Brothers. Everett surmises that Allison is a fearful woman who always wants to be with the current stallion in the herd. Virgil admits that he loves Allison and will never leave her. The town jailer is Bragg's cousin, so during the ensuing shootout where the Shelton Brothers are both killed and both Everett and Virgil are wounded, Bragg escapes.
Some time later back in Appaloosa, Virgil and Allison are living together and Virgil and Everett are still town marshals. Bragg's earlier boast about being friends with President Chester A. Arthur turns out to be true and his murder conviction is overturned. Bragg returns to Appaloosa with a great deal of money (either from a silver strike in Nevada or from robbing a train full of gold), opens a saloon and begins to woo Allison who is playing piano there.
Everett spies on Allison and sees her leaving Bragg's room above the saloon in the middle of the day. Knowing the only way that Allison and Virgil could ever be together is with Bragg dead, Everett tosses his badge on the bar, punches out Bragg and challenges him to a duel. Everett easily outdraws Bragg and shoots him dead while Virgil, Allison and the townspeople watch. Virgil rides out of town into the sunset, hoping his deed will bring Virgil and Allison some happiness for a time.
Stay to the very end to hear both Tom Petty and Ed Harris (!) sing western ballads over the end credits.
Thanks Evil Ed!