In a square in Seville, townspeople and soldiers relax in the sun. A pretty country girl, Micaëla, comes in looking for her sweetheart, Corporal Don José. An officer, Morales, tells her that José will be there later and she leaves. As the guard changes, a band of children parade around, imitating soldiers, whose numbers now include José. To the sound of the noon bell, girls from the nearby cigarette factory wander in to smoke and chat. Carmen enters last, flirting, joking, and explaining her philosophy of life: love is a wild bird that cannot be tamed. Don José sits apart, sullen and distracted; drawn by his indifference, Carmen tosses him a flower as the work bell calls the girls back. The square grows quiet and Micaëla returns to give José news of his mother. No sooner has she left than a disturbance is heard in the factory: Carmen is involved in a fight and the girls rush out arguing about who started it. Captain Zuniga orders José to arrest Carmen, but she resists their questions with brazen nonchalance. Her wrists are bound as she sings about Lillas Pastia’s Inn and the rendezvous she might arrange with José. Falling under her spell, he loosens her bonds. The crowd returns to see Carmen led to prison and roars with delight when she escapes. José is arrested for letting her escape.
A month later in Lillas Pastia’s Inn, Carmen joins her companions in a gypsy song and flirts with the matador Escamillo, who boasts of his exploits in the arena. When the inn closes, Carmen tells four friends – Frasquita, Mercedes, Dancaire, and Remendado—that love for José keeps her from going along on their next smuggling trip. They laugh at her then hide as José is heard approaching. Carmen sings and dances for him, but when a bugle sounds the retreat, he prepares to return to his barracks. This angers her and he pauses to show her the flower she threw at him, telling what it meant to him in prison. She invites him to join her wild mountain life, but he refuses. Suddenly Zuniga breaks in, provoking a fight with José. Carmen calls the gypsies who seize Zuniga. José is now forced to join the outlaws.
In their mountain hideout, the smugglers congratulate themselves on their successful exploits, but José is unhappy in their midst. Carmen finds his homesickness tiresome and busies herself with her friends as each tells her fortune with cards. Frasquita sees an ardent lover, Mercedes a wealthy husband, Carmen only death. The gypsies leave and Micaëla enters in search of José. A shot rings out and she hides. It was José’s gun aimed at Escamillo, who has come looking for Carmen. The two attack each other with knives and are separated by the gypsies. Escamillo invites them all to his next bullfight and leaves after insulting José, whose jealousy is reaching dangerous bounds. Remendado discovers Micaëla as she begs José to return home. José leaves with Micaëla as Carmen taunts him, causing him to turn on her, threatening her.
In Seville’s Plaza de Toros, the crowd gathers for the bullfight, hailing Escamillo. Carmen is with him and assures him of her love. She waits in the square, though her girlfriends warn that José has been seen prowling around. Carmen is a fatalist; she knows she must face him. José enters, demanding that she give up Escamillo. But she and José are finished. He pleads with her, but finally in frustration, she tosses a ring he had given her in his face. The crowd is heard cheering for Escamillo. When Carmen tries to enter the arena, José stabs her, falling in despair over her body.