Annie Wilson (Cate Blanchett) is a widow in a small Georgia town with three young children to support. She uses her telepathic talents to do psychic readings for her neighbors. It is a way of offering love and support to some very troubled individuals who have no other lifelines in the small community.
One of her regulars is Buddy Cole (Giovanni Ribisi), a car mechanic who has bad feelings about his father and fits of uncontrollable rage. He sees Annie as his only reliable friend. Another confused client is Valerie Barksdale (Hilary Swank) whose husband Donnie (Keanu Reeves) physically abuses her. Annie wants her to leave him. This advice brings Donnie into her home where he threatens her and the children. He's convinced that she is enslaved to Satan and doing his handiwork.
Annie not only shoulders the burdens of these two needy people, she also feels guilty about the accidental death of her husband in an explosion at the plant where he worked. Her oldest son Mike (Lynnsee Provence), who desperately misses his father, is constantly getting into fights at school. While visiting Wayne Collins (Greg Kinnear), the principal at Mike's school, she meets his fiancée Jessica King (Katie Holmes) and has a brief flash of water at this attractive woman's damaged feet.
Soon afterwards, Jessica disappears. Annie awakes in the middle of the night from a dream of garish images of a violent nature. Eventually, her visions lead the police to a pond owned by Donnie Barksdale. Jessica's body is found in the water, and Donnie is arrested for murder.
Sam Raimi directs The Gift, which provides several dramatic surprises before it's over. The film, thanks to the compelling and luminous performance by Cate Blanchett, offers a rounded portrait of the role of imagination in the life of a psychic. This gift, which she inherited from her grandmother, is both a blessing and a burden. The visions she sees are as real as rock or the cars that Buddy repairs. Yet the ridicule she undergoes during the trial at the hands of Donnie's lawyer (Michael Jeter) reveals the widespread distrust of psychic abilities in many communities.
Imagination is a central element of the spiritual life. The screenplay written by Billy Bob Thornton and Tom Epperson is a tribute to Thornton's mother who had "the gift." At one point in the film, Buddy says to Annie: "You're the soul of the town and you just need to keep doing what you're doing." When you look around any community, you are likely to find a few individuals who have the remarkable ability of forgetting themselves. All their attention is on others, so they don't have any energy left over for dwelling on what they want or insisting on their own way. Such selfless giving is what makes Annie the soul of her community. It stems from the spiritual practice of imagination, which in this case involves trusting her intuition and her connection to others in empathetic attunement.