Manderlay picks up where Dogville left off. In 1933, after having destroyed the town of Dogville, Grace willingly leaves with her father and his gangsters. They had discover that their turf in Denver has been taken over by other gangsters and they drive on in search of a new place to set up shop. As they drive south through the US, they stop in Alabama for a rest. While in Alabama they discover a plantation called Manderlay where slavery still exists. Completely closed off from the outside world, the negroes of Manderlay have no idea that slavery had been abolished years ago. A horrified Grace cannot believe the injustice taking place at Manderlay and insists that she must make things right. As her father and his gangsters prepare to drive off, Grace tells him that she will not go with them. She will stay at Manderlay to make sure that the slavery ends and the negroes gain the freedom that they deserve. At her request, Grace's father lets some of his gangsters stay with Grace to assist her in establishing order at Manderlay.

With the power of her father's gangsters, Grace forces the white slave owners out of power and gives the negro slaves their freedom. As punishment, she forces the white former slave owners to become the slaves and work the land. Grace discovers, however, that despite her good intentions, the confused negroes do not know what to do with their new lives, nor do they understand the concepts of freedom and democracy. Grace decides that she must stay at Manderlay for an indefinite amount of time so that she can teach them the principles of a democratic system and help them adjust their freedom. Despite her efforts and all of the good will behind them, Grace discovers that things go terribly wrong. The film Manderlay is particularly significant in the present time in view of what is going on with Iraq. No matter how well intentioned it may be, the forceful removal of an unjust dictator/government and the equally forceful implementation of democratic principles upon a society that is not ready to understand or accept them can have disastrous consequences. Swiftly introducing and implementing democracy upon a society that is unprepared can result in the complete opposite. Pre-Hitler Weimar Germany is a perfect historical example of that. In this light, the do-gooder Grace with the high morals becomes quite annoying as she never stops to think that her ideas may not actually be the best thing for the negroes of Manderlay. This film delves into the problematic issues of how societies grow and change. Ironically Lars von Trier had created the story of Manderlay before the invasion of Iraq. The film also looks at the strange relationship that some oppressed people have with their oppressors in which they feel more comfortable being led and being told what to do rather than having the pressure and responsibility of leading their own lives.

Manderlay is filmed in the same way as it's predecessor Dogville. There are no streets, walls, houses, doors, bushes, grasses, etc, and the actors mime knocking on and opening doors. As is the case with Dogville, it may seem a bit odd at first but you get used to it after a while and concentrate on the story and the characters. The role of Grace which was played by Nicole Kidman in Dogville is now played by Bryce Dallas Howard and she does an amazing job. Also, the role of her father which was played by James Caan in Dogville is now played by Willem Dafoe and he does an amazing job as well. In addition to Dafoe and Dallas Howard there is a brilliant cast which includes Lauren Bacall, Danny Glover, Jeremy Davies, Chloe Sevigny, and Isaach De Bankole.  Manderlay is a well put together film with interesting characters and a powerful story to tell.