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In this unusual romantic drama from Australia, Harry (John Lynch) and Kate (Jacqueline McKenzie) are both patients at a psychiatric care facility. While in therapy, the two meet and fall in love, in spite of their troubled pasts.
Despite the potential complications they might foresee with the relationship, Harry's main sources of support, his brother Morris (Colin Friels) and Morris's wife Louise (Deborrah-Lee Furness), are more concerned with Harry's stability and happiness than anything else, and they soon give him their blessing to marry Kate.
However, it soon becomes obvious that love does not conquer all. Kate becomes pregnant, and her doctors try to persuade her to have an abortion. They believe that her mental illness could be passed along to her child, that she would not make a fit mother, and that her medication for schizophrenia could have a harmful effect on the fetus.
Kate is convinced that the angel Astral speaks to her, and that the child she carries is his earthly incarnation; she refuses to have an abortion, but compromises by not taking her medication while pregnant. Harry stops taking his as well, but the couple's happiness is short-lived when their increasing instability leads to tragic consequences.
Angel Baby won seven Australian Academy Awards, including Best Picture, Best Actor, and Best Actress.