Something sinister has been happening to the dolphins that grace the waters off the Japanese township of Taiji. The quest for the horrible truth is the subject of this gripping documentary which was one of the popular favourites at last week's Sydney Film Festival.

The central figure in this ninety-minute detective story is Ric O'Barry, whose expertise as a dolphin trainer in the 1960's contributed to the success of the TV series "Flipper" and to the rise of the trade in bottle-nose dolphins for sale to amusement parks. O'Barry fell out of love with his profession when, as he describes in the film, one of his performing dolphins "committed suicide" in his arms. Our amusement was their torture.

Taiji is a small seaside town which makes its money from cetaceans big and small. Historically a whaling centre, Taiji boasts a kitsch-laden Whaling Museum and makes its money, both from tourism, and from the trade in dolphins. Any that can't be sold to zoos or amusement parks (and that is most of them) are herded into a cove just outside the town, which is jealously and aggressively guarded from prying eyes by locals. Locals who have a vested interest in the sale of dolphin meat.

O'Barry, by now an activist devoting his life to saving marine wildlife, attracted the interest of the Oceanic Preservation Society, whose executive director, distinguished still photographer Louie Psihoyos, directed "The Cove" and spoke at the festival screenings in Sydney.

As Psihoyos and his team looked for ways to get into the cove, they developed an ingenious plan which invoked the services of Industrial Light and Magic and led to the assembly of a highly specialised team of aquatic experts - an "Ocean's Eleven" in more ways than one. This was no low-budget exercise, with Netscape billionaire Jim Clark bankrolling the operation (and taking an Executive Producer credit for the film).

The evidence of mass dolphin slaughter that they obtained is graphic and harrowing to watch. For the obsessed O'Barry it was the damning evidence to be presented to the people of Japan and to its allies in the International Whaling Commission. Early in "The Cove" we are told that O'Barry has been banned for life from attending IWC meetings. The 2006 incident, shown towards the end of the film, which resulted in O'Barry's expulsion, is a powerful and surreal moment which drew wild applause at the screening that I attended.

Over two thousand dolphins are slaughtered in Taiji Cove every year. Their meat contains dangerous levels of mercury and is distributed to schools as part of a free lunch program. The ending of the film is a call to arms to the moviegoing public in the manner of "Outfoxed" and "An Inconvenient Truth", though it must be said that the use of David Bowie's "Heroes" over the closing credits is simplistic and betrays the style and intelligence of everything that has gone before.

"The Cove" had its premiere at last January's Sundance Film Festival, and will surely be a leading contender for the 2010 documentary Oscar. But before then, a wide cinema release is planned for Japan this August - one month before the Taiji dolphin-hunting season is due to begin. Can "The Cove" outrage the Japanese public and force a halt to the atrocity?