Ledger would return to Australia for his next movie, Ned Kelly, which would see him reunite with director Gregor Jordan. It would also see him leave Christina Cauchi and quickly take up with co-star Naomi Watts (also a Home And Away veteran), 11 years his senior and then hot after The Ring (in which she'd appeared with Ledger's old mate Martin Henderson). As Kelly, Ledger would be subdued and noble, a young Irishman persecuted by racist authority. He'd also, of course, be hugely heroic as he led a gang including Orlando Bloom into bank robberies and away from the pursuing forces of Geoffrey Rush. Unfortunately, the film would generate little interest outside Australia and receive no proper release in the States.

Ledger was now big news. His relationship with Heather Graham had turned him into tabloid fodder and his affair with Naomi Watts, Oscar-nominated for 21 Grams and set to star in Peter Jackson's King Kong, brought a great deal more unwanted attention. Fame was not what he was after, and he again proved it by turning down the lead in Oliver Stone's mega-budget epic Alexander. True to his character, he instead stayed focused on his aims and launched into a rapid succession of deliberately varied roles. The Lords Of Dogtown, a fictional adaptation of the renowned documentary Dogtown And Z-Boys, saw him as Skip, the stoned and drunken 1970s shop owner who sponsors a pioneering local skateboarding team and helps them on their way to fame. Then would come The Brothers Grimm where he and Matt Damon would play the titular siblings, travelling con men who fool the 18th Century public with phony magic. Damon is entirely cynical, Ledger more innocent, but both are terrified when Jonathan Pryce catches them and sends them to rescue lost children from a forest haunted by Monica Bellucci's murderous Mirror Queen. It was, as you'd expect from Terry Gilliam, amazing to look at but a tad weak in script, possibly due to confusion when MGM pulled the finances, Gilliam took a break to film Tideland and then the Weinstein brothers stepped in with the inevitable arguments that involves (interestingly, after 10 Things, Ledger had been set to star in Calcio, about an English football fan in Sardinia, but it had been cancelled at the last because Harvey Weinstein didn't think enough of him. Weinstein would change his mind in time to finance The Four Feathers).

In the can and awaiting release was Candy, a moving Asutralian production that saw Ledger and Abbie Cornish as a beautiful young couple who, with the help of louche mentor Geoffrey Rush, begin to experiment with drugs and wind up addicted to heroin. Both escaping their past pain, they're bound together by fear and addiction, but also by love, a love that's severly tested when Cornish begins to lose her mind. It was tough stuff, but would win a far larger audience than might've been expected due to Ledger's major success with Ang Lee's Brokeback Mountain. Based on a short story by E. Annie Proulx, this was set in 1963 Wyoming with Ledger and Jake Gyllenhaal as young ranch-hands tending animals on the mountain of the title. Drawn to each other, they have sex but cannot accept their sexuality, particularly Ledger, brainwashed into denial by his monstrously homophobic father. However, when both are later married and settled into "normal" lives, Gyllenhaal throws off his sexual shackles and goes looking for Ledger, beginning a not-so-secret long-term affair that torments Ledger and destroys his rightly suspicious wife, Michelle Williams.