In a town square in Seville, Micaëla passes by a cigarette factory in search of a soldier, Don José. Officer Moralès invites her to wait with him, but she decides to return for the changing of the guard.
Later, Don José’s military unit arrives, led by commanding officer Zuniga. The factory bell rings for a break and the square fills with women, including Carmen, who attracts the most attention. Before returning to work, she tosses a flower to José. Micaëla gives José a letter from his mother. Suddenly, screams are heard from the factory: Carmen has been involved in a fight. She refuses to answer Zuniga’s questions. While Zuniga is writing out her arrest warrant, Carmen seduces José, who lets her escape.
Carmen and her friends, Frasquita and Mercédès, are entertaining Zuniga and Moralès. Celebrated bullfighter Escamillo arrives and is instantly attracted to Carmen. Dancaïre and Remendado try to convince Carmen and her friends to accompany them on their next mission, but Carmen refuses, saying she is in love with José and is awaiting his release from prison.
Don José returns and declares his love for Carmen, who dances for him. When the roll call sounds from the barracks, José is torn between his military duty and his feelings for Carmen. In the moment José decides to leave, Zuniga returns. José is fiercely jealous and starts a fight with his superior officer. Realizing his army career is over, José now has no choice but to join Carmen.
On a treacherous mountain pass, the smugglers relish the perils of their assignment. Carmen and José’s love affair has run its course: she has grown tired of him, though he is still obsessed with her. Frasquita and Mercédès read their fortunes in a pack of cards, but when Carmen cuts the cards, they foretell her death. The women leave to distract the customs guards, and José remains behind in the camp.
Micaëla and Escamillo converge on the deserted encampment, seeking José and Carmen, respectively. Micaëla hides as José confronts and fights Escamillo. Carmen and the smugglers return and stop them, and Escamillo invites the whole party to his next bullfight. Micaela begs José to return to his dying mother.
A crowd has gathered for Escamillo’s bullfight, and Carmen arrives with Escamillo. After Escamillo enters the arena, Carmen meets José for a final confrontation.