Henry Lawson’s short story “The Drover’s Wife” has generated many retellings and reimaginings due to its importance as one of the staples of Australian national literature and sources of Australian identity. This paper analyses one of the more recent reinscriptions, Lisa Jacobson’s “The Master Builder’s Wife,” focusing on magical realist mode and examining gender roles and national stereotypes addressed in the story. The paper uses Chanady’s theory on the differences between magical realism and Todorov’s pure fantastic, giving examples of how the story conforms to magical realist mode as opposed to the fantastic. Acknowledging the difficulty of pinpointing uniform characteristics of this mode in literary theory, this paper enumerates and explains many different magical realist elements and their relevance for Jacobson’s story, with focus on Chanady’s and Faris’s theory of the mode. Having in mind that this mode is not very popular in Australia, the second part of the paper compares the short story to Lawson’s original, as well as other prominent retellings, showing how Jacobson uses magical realism to reimagine the story and the protagonist. Many magical realist elements are adopted in the story to highlight central issues of the text. The short story comments on the drover’s wife, an influential national female figure, and through her, the representation of Australian women in the bush and in national literature. The paper compares Jacobson’s and Lawson’s protagonists and examines whether they conform to the image of a “proper” Australian woman. In addition to the character of the drover’s wife, the paper puts emphasis on the setting and how it affects Jacobson’s protagonist. Special attention is dedicated to female retellings and the way in which Jacobson’s story differs from them in some aspects. This paper argues that magical realism sets the short story apart from other famous reinscriptions and allows it to avoid re-establishing a stereotypical representation of women.