A square in Seville. The soldiers are killing time looking at the passers-by. Suddenly the brigadier Moralès catches sight of Micaëla, Don Jose’s childhood sweetheart. He speaks to her and she tells him that she is looking for the brigadier Don José. Moralès replies that José belongs to the company that will shortly arrive to take over the watch. He tries in the meantime to persuade Micaëla to stay with them, but she refuses.
The soldiers of the relieving guard are preceded by a group of children playing.
The officer Zuniga stands at the front of Don José’s company and drives the children away. Moralès tells Don José that there is a girl who is looking for him. Don José realises that it must be Micaëla.
The bell from the cigarette factory on the square begins to ring. The cigarette-girls come out of the factory and are surrounded by young men who are trying to win their favours. The young men have not yet seen Carmen, whom they greatly desire, and they wonder where she could be.
Carmen appears at the end of the group. She sings about love and refuses all the young men’s advances. Don José alone seems to awaken her special interest, since he has remained totally indifferent to her arrival.
The young men attempt once more to seduce Carmen, but she is only interested in Don José. She throws him a flower. The young men and women laugh and follow Carmen off.
Don José is left alone on the stage. Micaëla comes up to him and talks to him about his mother, giving him a letter from her. José’s mother had also asked Micaëla to give José a kiss from her. They think nostalgically of the little town of their birth.
Micaëla leaves before Don José can read the letter. He reads it and finds his mother’s suggestion that he marry Micaëla.
A row breaks out in the cigarette-factory. The girls come running out quarrelling. They say that Carmen flew at the cigarette-girl Manuelita after Manuelita had insulted her. Zuniga quietens things down with the help of his soldiers. Zuniga asks Don José to tell him exactly what happened in the factory. Don José says that Carmen had attacked Manuelita with a knife.
Carmen is brought before Zuniga and he asks her to tell him what really happened. She evades his questioning and answers him with a song. Carmen is arrested and Don José is ordered to take her away. Before Don José takes her away to prison, Carmen tries to seduce him and suggests that he let her escape. Don José resists her with difficulty.
To give her seduction of José more power, Carmen sings to him. Don José surrenders to her and unties her hands.
Zuniga returns with the warrant of arrest, but Carmen breaks free and flees.
Carmen and her two friends Frasquita and Mercedès are sitting at a table in Lillas Pastia’s tavern. Zuniga and some other officers come in and are surrounded by the girls. There is much music and drinking.
The toreador has watched what is happening from his table. He drinks a toast to the officers and sings a song about bullfighting that is token up by all present.
Escamillo’s glance falls on Carmen. He asks her name and promises that he will wait for her until she loves him. Lillas Pastia interrupts this brief idyll and tells the officers that it is time for them to leave his tavern; it is late.
All present salute the toreador one lost time. Escamillo, accomponied by the officers, leaves the tavern.
Lillas Pastia’s real reason for sending the officers away is that he is expecting Dancaïro and Remendado, the leaders of the smugglers’ band. They are coming to explain their new plans. The gang leaders need the women’s help to make their plan succeed, but Carmen says that she will not take part straight away; she is in love, and this time duty will have to give way to love.
Suddenly they hear someone singing. Carmen recognises Don José’s voice. The gang leaders suggest to Carmen that she talk him into joining them in their plans. They withdraw, leaving Carmen alone on the stage.
Don José enters and says that it is scarcely two hours since he was released from prison. He had been jailed because he had let Carmen escape. Carmen had sent him a file and money to help him escape, but he had made use of neither; he did not want to go through life as a deserter. Carmen tells him that she danced for the officers, and Don José becomes jealous. She agrees to dance for him now. The music of her dance is interrupted from time to time by trumpets in the distance that are sounding the roll-call. Don José gets up to return to barracks and arouses Carmen’s ire. She tries to persuade him to go with her and to become one of the smuggler’s gang. Don José refuses, in spite of the love that he has for her. He must leave.
Their lovers’ quarrel is interrupted by a loud thumping on the door. Zuniga rushes in and catches Don José with Carmen. He orders José to return to barracks. A fight develops between Zuniga and Don José. Carmen calls for help and the other members of the gang appear and overpower Zuniga. Don José has no other option but to abandon his career as a soldier and to join up with the smugglers’ gang.
In the mountains, in a storage-dump belonging to the smugglers. The new recruit is brought inside by the gang’s helpers. All are tired from their heavy work.
Don José tries in vain to make peace with Carmen.
To pass the time Mercedès and Frasquita tell their fortunes in the cards. They predict happiness for the girls, but Death appears each time that Carmen turns a card over.
Dancaïro and Remendado come back, having found a way to break into the town.
The whole gang prepares to take advantage of the moment and they go back to work. Don José is given the task of guarding their hiding-place.
Micaëla has also found her way to the smuggler’s den in her search for Don José. She is afraid and prays to God for help. She sees Don José. Don José firest at a stranger who is approaching the smugglers’ lair. The stranger turns out to be Escamillo, who is also looking for his beloved. He does not know who Don José is and tells him about his beloved, the gypsy-girl Carmen, and how she was once in love with a cashiered soldier. Don José recognises himself in the story and bursts out in rage. He seizes his knife and challenges Escamillo to a duel.
This disturbance in their hide-out makes the smugglers and their girls return. Carmen sees her former lover opposite her new hero, Escamillo. The struggling pair are separated by Dancaïro and Remendado. As the band prepares to leave, Remendado discovers Micaëla. She begs Don José to return home to his mother, but he wants to stay with Carmen. Micaëla tells him that his mother is on the point of death, at which José calms down and leaves the smugglers’ lair with Micaëla. He threatens Carmen that he will return.
Seville, a square in front of the bullring. The spectators are watching for the arrival of the bullfighters. They all applaud Escamillo when they see him. Carmen is standing at his side, for she has become his new mistress. Escamillo enters the ring and leaves Carmen outside. Frasquita warns Carmen that Don José is in the neighbourhood, but Carmen does not fear him.
Don José and Carmen stand facing each other. He accosts her one last time, but his plea for her love is hopeless. Carmen tells him that he must either let her go or kill her. Amidst the cheering that proclaims Escamillo’s victory, Don José decides upon the latter and stabs her.