The film follows a peasant couple, Zhao Deshan and his wife Xiuzhi, living in rural Yunnan province near Zhaotong in southern China. Their lives are thrown into upheaval when the local mayor "rewards� them with two foreign sheep donated by a former villager, now an official in Beijing. The couple is then tasked with breeding the sheep for their wool and to bring prosperity to their small community. Much to their chagrin, the sheep do not take to their new environment and the couple are forced into ever more ingenious ways of making the sheep appear greater than they really are. As they do so, they also come to value the sheep as companions in their family. When it becomes clear that the two "great� sheep are not the boon they were thought to be, the local authorities repossess the animals.