In and around Seville, Spain circa 1820
Outside a cigarette factory, a group of soldiers are passing time in the square. Micaëla, a peasant girl, enters and asks if anyone knows Don José. One of the soldiers, Morales, tells her that Don José will return at the changing of the guard. A trumpet call heralds the changing of the guard, Morales tells José that Micaëla is looking for him.
The factory bell rings and the men of Seville await the female workers as they take their break, especially the beautiful gypsy, Carmen. With the men gathered around her, she sings her famous Habanera – explaining to them that love obeys no laws. Only Don José ignores her; Carmen throws a flower at him. The women go back into the factory and the crowd disperses.
Micaëla returns, with a letter from Don José’s mother. His mother wishes for him to return home and marry Micaëla. Micaëla runs off in embarrassment. A fight erupts from the factory between Carmen and another girl. Carmen refuses to cooperate, so Don José is ordered to take her to prison. Carmen entices him to go dancing at the tavern later. Mesmerized, José agrees to help her escape. When discovered, Don José is arrested for neglecting his duties.
A month later at the tavern, Carmen and her friends, Frasquita and Mercédès, entertain Zuniga and other officers. Zuniga tells Carmen that José has just been released from prison. The bullfighter Escamillo enters, bragging about his exciting life. He propositions Carmen, but she replies that she is involved with another man.
Smugglers Dancaïre and Remendado enter and explain their latest smuggling scheme to the women. Frasquita and Mercédès agree to the plan, but Carmen refuses because she is in love. The smugglers leave and José enters. Carmen makes José jealous by telling him about how she danced for Zuniga. She agrees to dance for him alone when the bugles sound. José must return to the barracks. Carmen mocks him, but he answers by producing the flower she threw at him a month earlier. But Carmen decides that José must prove his love for her by deserting the army and join her in the mountains. Zuniga bursts in and in a jealous rage, José attacks him. Because he has attacked an officer, José has no choice but to desert and join the smugglers.
In the mountains, Carmen and José quarrel. Carmen is bored with José so she advises José to return home to his mother. Frasquita and Mercédès read cards to tell the future: they envision death for both Carmen and José.
Micaëla appears, determined to rescue José from Carmen. But Micaëla hides when a shot is fired. José has fired at an intruder, who turns out to be Escamillo. When Escamillo mentions José, a jealous José reveals himself and they fight. Carmen and the smugglers separate Escamillo and José. Escamillo invites everyone to be his guests at the next bullfight in Seville. Micaëla is discovered, and she begs José to go with her to his mother. He refuses at first, but agrees upon hearing that his mother is dying. José warns Carmen that they will meet again.
Outside the bull ring in Seville, the excited crowd cheers for the bullfighters. Carmen enters on Escamillo’s arm. Frasquita and Mercédès warn Carmen that José has been seen in the crowd but Carmen says that she is not afraid. José enters. He implores her to forget the past and start a new life with him. She tells him that everything between them is over and that she will never give in: she was born free and free she will die. While the crowd is cheering Escamillo, José tries to prevent Carmen from joining her new lover. Losing her temper, Carmen takes Jose’s ring off her finger and throws it at his feet. José stabs her to death. Police drag him away as he confesses to killing the woman he loves.