After Brokeback Mountain, Ledger costarred with fellow Australian Abbie Cornish in the 2006 Australian film Candy, an adaptation of the 1998 novel Candy: A Novel of Love and Addiction, as young heroin addicts in love attempting to break free of their addiction, whose mentor is played by Geoffrey Rush; for his performance as sometime poet Dan, Ledger was nominated for three "Best Actor" awards, including one of the Film Critics Circle of Australia Awards, which both Cornish and Rush won in their categories. Shortly after the release of Candy, Ledger was invited to join the Academy of Motion Picture Arts and Sciences. As one of six actors embodying different aspects of the life of Bob Dylan in the 2007 film I'm Not There, directed by Todd Haynes, Ledger "won praise for his portrayal of 'Robbie [Clark],' a moody, counter-culture actor who represents the romanticist side of Dylan, but says accolades are never his motivation". Posthumously, on 23 February 2008, he shared the 2007 Independent Spirit Robert Altman Award with the rest of the film's ensemble cast, its director, and its casting director.
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Ledger had relationships with actresses Lisa Zane, Heather Graham and Naomi Watts. In 2004, he met and began dating actress Michelle Williams on the set of Brokeback Mountain. Their daughter, Matilda Rose, was born on 28 October 2005 in New York City. Matilda's godparents are Brokeback co-star Jake Gyllenhaal and Williams' Dawson's Creek co-star Busy Philipps. In January 2006, Ledger put his residence in Bronte, New South Wales, up for sale, and returned to the United States, where he shared a house with Williams, in Boerum Hill, Brooklyn, from 2005 to 2007. In September 2007, Williams' father confirmed to Sydney's The Daily Telegraph that Ledger and Williams had ended their relationship. After Ledger's death, news outlets reported that his drug abuse had prompted Williams to request that he move out of the apartment they shared in Brooklyn.
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"Some people find their shtick," Ledger reflected on the categorisation of style. "I never figured out who 'Heath Ledger' is on film: 'This is what you expect when you hire me, and it will be recognisable'... People always feel compelled to sum you up, to presume that they have you and can describe you. That's fine. But there are so many stories inside of me and a lot I want to achieve outside of one flat note."
^ Nick Squires (1 April 2008). "Heath Ledger 'fathered a secret love child' ". The Daily Telegraph. UK. Retrieved 6 August 2008. If the claims are proved to be true, Ledger's multi-million pound estate would have to be divided between the child he fathered in his teens and his two-year-old daughter, Matilda Rose, whose mother is Hollywood actress Michelle Williams. ... The actor's parents, Kim and Sally Ledger, have declined to comment on the reports [based on comments by other family members, including his uncle Haydn Ledger].