The Lieutenant is an historical novel set mainly in the early years of the first British colony in Australia, which was established in 1788 at Sydney Cove. The novel opens with a description of Daniel Rooke as "quiet, moody, a man of few words. He had no memories of other than being an outsider." It is Rooke's outsider status that allows Kate Grenville to comment on 18th-century social class immobility, slavery in the British Empire, and interactions between the Aboriginal people and the colonists.

Daniel Rooke is a mathematical savant and a gifted linguist but socially awkward; apart from that with his clever, accepting younger sister Anne, he has few satisfactory relationships. In astronomy and mathematics, he discovers beauty and order in the universe and an acceptance of himself. Grenville writes tellingly about Rooke's love of linguistics and mathematics: "He loved the way the slippery mysteries of language could be reduced to units as reliable and as interchangeable as numbers." More difficult for him are the mysteries of human interaction. It is not until he meets Tagaran, a fearless and engaging Aboriginal girl curious about his observatory, and Warungin, a local leader, that he learns that "you did not learn a language without entering into a relationship with the people who spoke it with you," that "the names of things, if you truly wanted to understand them, were as much about the spaces between the words as they were about the words themselves... It was a leap into the other."

Warungin instructs Rooke in the names of the implements used by his people for hunting, fishing, and waging war, but when tensions between the colonists and the local tribes increase, it is Tagaran whose curiosity about Rooke's rifle and its operation informs him that she is not just a charming friend, but an earnest advocate for her own people. Rooke starts to understand the local Aboriginals as a people in their own right, not as interesting curiosities or as individuals who can be befriended into the control of the colonial administration.

Rooke's transformation to his most social self comes from his striving for understanding with Warungin and Tagaran. When Warungin is explaining the word for Rooke's people, he places a hand on the front of Rooke's red jacket and says the word Berewal-gal. Warungin's touch was "as if understanding could flow out of it, pass through the red wool and into the heart of the man beneath." Rooke must go beyond his facility with linguistics and begin to fathom nonverbal means of communication. He must recognize that it is those "spaces between the words" that are so important for understanding and recognition of each other as human beings.

The Lieutenant is a fiction based on the life of the real Lt. William Dawes and the first two years of the colony at Sydney Cove. Dawes helped establish the colony but left earlier than he wanted, unwilling to support punitive expeditions against the local Aboriginal people. Gaining little recognition for his contributions in Australia, he went on to work in Antigua setting up schools for former slaves. To avoid controversy over historical authenticity, Kate Grenville has renamed the major characters while sticking closely to the actual recorded events. Tagaran's dialogue is taken directly from the young Patyeragang's words as recorded by Dawes in his language notebooks. Her endearing personality is Grenville's creation. Rooke's transformation from socially awkward savant struggling in society to independent moral agent is an amazing and quietly charming story.