A square in Seville - Micaela, a peasant girl from Navarra, approaches the guardhouse and asks to speak with the corporal Don José, her childhood friend, to whom she is engaged. They tell her to come back a little later when José will come back at the changing of the guard. Now the cigarette girls come from the factory and mingle with the soldiers. Among them is Carmen, a gypsy, who is immediately surrounded and plied with attention. But she has caught sight of Don José and, after singing a provocative song, she throws him a flower. Don José feels the gypsy's attraction. But Micaela returns, bringing him news of his mother and her blessing. The young man is moved. After saying goodbye to Micaela, he is about to throw away the flower when loud cries are heard in the factory. In a quarrel Carmen has wounded another girl. Zuniga, the captain on duty, has her arrested and entrusts her to Don José, who is to guard her until she can be taken off to Arison. But once Carmen is alone with the corporal, her seductive charms soon get the better of him. He unties her hands and agrees to meet her at the tavern of Lillas Pastia. So when two dragoons march off with Carmen and the corporal, to take her to prison, she manages to escape.
The tavern of Lillas Pastia - Carmen is singing and dancing for a group of officers, including Zuniga, who has had Don José arrested and who, at the same time, has joined the fist of the gypsy's suitors. The bullfighter Escamillo comes in, with a swarm of admirers: he too succumbs to Carmen's charms, but goes off, again, unsuccessful. When the officers and the other have gone, El Dancairo and EI Remendado, two smugglers of the band to which Carmen also belongs, try to persuade her to return to their old life in the mountains. Carmen refuses. She is taken with Don José and is waiting for him. This is the very evening that the corporal is to come out of Arison, where he has been kept for having helped her escape. In fact, Don José arrives, heedless of everything but his passion for the gypsy. Carmen dances for him and forces him to stay, even after "retreat" the summons to quarters is sounded. Carmen urges him to come away with her into the mountains. But then Zuniga reappears. Irritated at finding Don José with Carmen, the captain orders the young man to leave. Don José refuses and draws his sword. The smugglers intervene; with drawn pistols they make the officer go away. Now the insubordinate Don José has no choice: he will follow Carmen and the smugglers to the mountains.
A rocky, deserted spot in the mountains - It is night. In the light of the campfires some gypsies are sleeping, wrapped in their cloaks. Don José wanders about restlessly, thinking with remorse of his old mother from whom he has kept his new life hidden. Carmen is already tired of him and is thinking of the bullfighter Escamillo as her next lover. Her soul is filled with dark forebodings of death, as she enquires of the cards about her fate, imitating her friends Frasquita and Mercedes. But as if the very inevitability of her fate were dominating her, she cannot and will not do anything to oppose its course. Don José, who still desperately loves the woman who has been his ruin, fights with Escamillo, when the bullfighter comes up into the mountains to see Carmen. The men are duelling with their knives when Carmen arrives and separates them. Escamillo goes off, contemptuous and self-confident. Meanwhile Mecaela who has been hidden amid the mountain passes pleads with her betrothed to follow her, because his mother is dying and calling for him. Don José, threatening the defiant sarcastic Carmen, goes off with Micaela, racked grief and jealousy.
A square in Seville, near the Arena - The crowd cheers Escamillo as he approaches for the corrida. The bullfighter is accompanied by Carmen, splendidly dressed. Frasquita and Mercedes warn their friend that Don José has been seen lurking around the arena. But Carmen is not afraid of her former lover. When she is alone with him, she hurls all her contempt in his face. Overcome with jealousy, the young man begs her to come back to him, to love him again: but his pleas are in vain. Carmen is determined. Shouting harshly that all is over between them, she throws at his feet a ring he had given her. From the arena comes the sound of the crowd acclaiming the victorious Escamillo. Don José, crazed, falls upon Carmen and stabs her. Escamillo, surrounded by the throng, appears on the steps of the arena as Don José falls sobbing on the body of the woman he has killed, desperately calling her name.