Outside a cigar factory, soldiers press forward to see the gypsy Carmen. She sings a habanera which enchants the corporal Don José. His fiancée Micaëla soon after arrives bringing greetings from his far-away mother. Meanwhile, a fight, started by Carmen, breaks out in the factory. She is arrested and handed over to José. She promises him a rendezvous later that night if he lets her escape. José feigns being thrown to the ground, enabling Carmen to run off. José’s superiors see through the ruse, and he is taken to prison.
Carmen dances with her friends Frasquita and Mercédès. The toreador Escamillo enters, but Carmen rejects his advances. Smugglers invite Carmen to join them, but she shoos them away as soon as José approaches. At the sound of the bugle call, José, who has been demoted, says he must return to the barracks. Carmen teases him. In the meantime, the lieutenant Zuniga attempts to seduce Carmen. The jealous José flings himself at his superior officer, but the smugglers enter and separate them. They urge José to join their band.
Forced into hiding with Carmen, José thinks with remorse of his mother. Carmen is tired of him. She reads tarot cards with Frasquita and Mercédès. Their fate is sealed: it will be death for her and José. The smugglers go off with the women to do their shady business. Micaëla hides waiting for José. Escamillo arrives looking for Carmen, provoking a fight with the toreador. Carmen separates them. Micaëla’s presence is discovered, and she tells José that his mother is dying. José, stricken with grief, follows Micaëla out, but not before promising Carmen that he will return.
A square is filled by a noisy crowd awaiting the arrival of the bullfighter. Escamillo enters with Carmen on his arm. Frasquita and Mercédès warn Carmen of José whom they have seen lurking around. Carmen says that she will confront José and end their relationship once and for all. After the crowd funnels into the area, José implores Carmen to come back to him. She tosses away the ring which he had given her and defiantly proclaims her love for Escamillo. Just as Escamillo defeats the bull, José stabs Carmen to death. He falls sobbing over her corpse, admitting his guilt.