Christmas Eve in a small German town in the mid-nineteenth century. The lights of Counselor Stahlbaum's house glisten in the falling snow. Guests loaded with presents - children and adults - hurry toward the house. Among them we see Uncle Drosselmeyer, a friend of the children.
For a fleeting moment we see the excited children anxiously peeking through the doors. Among them is the host's son, Michael. Drosselmeyer opens the doors to the salon, in the center of which sparkles the Christmas tree.
The children dance around the tree, and in the end receive their presents. The adults celebrate, toast each other, and dance an old-fashioned dance much to the delight of Grandmother and Grandfather. Drosselmeyer grabs the childrens' attention by appearing dressed as a magician. His puppets perform a battle between a fairy tale prince and an evil mouse king, in which the prince saves his love, the princess. Wonder of wonders! The dance of the mechanical dolls begins. The clown, the porcelain doll and the moor doll all come to life. Drosselmeyer sneaks yet another present under the Christmas tree: a nutcracker. No one wants the grotesque doll expect Maria, the hosts' young daughter. Feeling sorry for the orphaned toy, she reaches for it. She plays with it and rocks it but her brother Michael, being curious about the strange doll, wants to play with it as well. The nutcracker falls victim to the children's squabbles and his jaw breaks. Drosselmeyer puts everything in order and makes peace... but it is getting late. The guests slowly bid farewell, the house becomes quiet, and the lights are dimmed.
We are in Maria's bedroom. Before going to sleep, the young girl rocks the doll once more and places it in the large biedermeier armchair. She daydreams about the evening's festivities and imagines wild mice munching away on the Christmas candies. On the verge of falling asleep, she tries to defend the nutcracker from them... and begins to dream.
The Christmas tree becomes enormous, the toys take on a new dimension, and the giant Mouse King springs forth. The Nutcracker comes to life and, at the head of his army of tin soldiers, defends the Christmas tree. A duel ensues between the Mouse King and the Nutcracker, and lo and behold, the Nutcracker is victorious while the mice flee. We catch a glimpse of Drosselmeyer among the branches of the Christmas tree and at the moment the Nutcracker magically transforms into a handsome, young prince. The wise old Drosselmeyer hands his magic wand over to the prince.
The stage pictures a snowy forest. Maria appears as a young princess, and the Nutcracker greets her with adoration. They discover their feelings for one another while dancing a delicate, dream-like pas de deux. As a finale, the prince gently lifts the princess on his outstretched arms and leaves the stage with her. Snowflakes begin to swirl and come to life. At first only four, then more and more snowflakes dance onto the stage. They become a giant snowball, then break apart into smaller groups and, finally a giant circle of snowflakes envelopes the stage. Bells toll during the gentle snowfall and soon only one or two snowflakes remain. Maria and the prince, arm-in-arm, begin their long journey, following the snowflakes.
Maria and the prince sail on a fairy tale sea in a golden ship. The "journey" gently rocks them and the beautiful music accompanies the young couple to the prince's kingdom.
The ship docks near a seaside cave. The prince looks for the road leading to his kingdom. All of a sudden, bats - allies of the beaten Mouse King - obstruct their path. However, the prince is again victorious with the help of the magic wand he received from Drosselmeyer.
At the lace palace, the inhabitants of the "Doll Kingdom" greet the returning prince and his bride, Maria, with deep adoration. The dolls display their beauty through a series of dances: First, we see four dancers performing a vivid Spanish dance. They are followed by the rhythms of an Eastern dance in which the main dancer is accompanied by four ballerinas bearing silk scarves. With jumps and quick turns,
Chinese dolls dance to the staccato music. They are soon followed by Russian dancers. A rococo pas de trois is performed by children resembling Limoges porcelain dolls. The performance reaches its peak with the Waltz of Roses, featuring eight pairs of dancers and four soloists, who are joined by Princess Maria and the Nutcracker Prince. Their classic pas de deux is a beautiful declaration of love. All the beautiful dolls of the lace palace join in for the finale. The scenery is transformed, and the Christmas tree appears in shining light. The happy couple moves toward the beautiful tree- and at this point, Maria's dream comes to an end.
We are in the young girl's bedroom. The nanny tiptoes in and wakes the sleeping Maria. The child rubs her eyes. Still half asleep, she runs to the Nutcracker and embraces it... they had a wonderful dream together.