In 1992, the Australian High Court recognised that the Murray Islanders held native title rights over their land, effectively debunking the doctrine of terra nullius. This became known as the Mabo Decision, as the key plaintiff was Eddie Mabo, a traditional custodian of the land. The Mabo Decision has been the most influential legal decision in this country in defining the rights of Indigenous Australians in a “post-colonial” society. Hence, pre-Mabo and post-Mabo have come to signify the strong colonial framework before 1992 and the legally altered one after the decision. But what Larissa Behrendt terms a psychological terra nullius continues to pervade non-Indigenous representations of history and colonisation. We argue in this paper that Australian children’s literature, in particular, is still coming to terms with this psychological terra nullius, leading to a clash of pre-Mabo metanarratives of settlement and post-Mabo awareness of invasion and dispossession. Post-Mabo, non-Indigenous representations face the dilemma of acknowledging the presence of Indigenous peoples within colonialist frameworks built on the doctrine of terra nullius. That is, myths of white settlement have been, and continue to be, the basis for ideological, institutional and societal practices and beliefs that centre non-Indigenous cultures and relegate Indigenous cultures to the margins. We have chosen John Marsden and Shaun Tan’s 1998 multi-award-winning text The Rabbits as the focus of our examination because of its attempt to enter into and reflect recent national and historical dialogues about the construction of Australia’s history. In this text that deals explicitly with colonisation as a form of invasion and dispossession, we wish to examine Australia’s psychological terra nullius in terms of how it tries to create and invoke a post-Mabo collective identity.