In a square in Seville, townspeople and soldiers relax in the sun. Micaëla arrives in search of her sweetheart, Don José, a corporal. A fellow officer, Moralès, tells her José will be there later, then offers himself as a substitute, but she leaves hastily. As the guard changes, children parade, imitating the soldiers, whose number now includes José. At the sound of the noon bell, girls from the cigarette factory come to smoke and chat. Carmen, a gypsy who works in the factory, flirts with the local men, airing her philosophy of life: love is a wild bird that cannot be tamed. Sullen and distracted, José sits apart. Carmen tosses him a flower from her bodice as the work bell calls the girls back inside. Micaëla returns to give José news of his mother, who has sent him a kiss, which the girl delivers shyly. No sooner has she left than a disturbance is heard in the factory: Carmen is involved in a fight. The girls run out, arguing over who started it. Lt. Zuniga orders José to arrest Carmen. Her wrists bound, she is left alone with José, who forbids her to speak to him. Instead, she flirts with him by singing “to herself” about Lillas Pastia’s inn and the rendezvous she might make with “a certain officer” who has taken her fancy. José, intoxicated, agrees to let her escape in exchange for the promised rendezvous; when she pushes him to the ground and runs off, he is arrested for his negligence.
A month later, at Lillas Pastia’s, Carmen regales the customers with a gypsy song. The matador Escamillo arrives, boasting of his exploits in the arena. He is immediately attracted to Carmen, who puts off his advances. Dancaïre and Remendado try to convince Frasquita, Mercédès and Carmen to accompany them on their next smuggling trip. The girls are game, except for Carmen, who says she is in love with José and is awaiting his return from prison. The others laugh at her, then depart as José is heard approaching. Carmen sing and dances for him, but when a distant bugle sounds, he says he must return to the barracks. Carmen mocks him, saying he doesn’t love her, and he replies that he has kept the flower she threw, conjuring her image in his prison cell. He refuses her suggestion that he join her wild mountain life, but when Zuniga breaks in, looking for Carmen, José loses his temper and attacks his superior. Carmen summons the other gypsies, who throw the lieutenant out. José, now an outlaw, has no choice but to join their band.
In their mountain hideout, the smugglers congratulate themselves on their successful trade, but José is unhappy. Carmen finds his homesickness tiresome and occupies herself with her friends, reading fortunes in the cards. Frasquita foresees a lover, Mercédès a rich husband, but Carmen sees only death. The gypsies leave José as lookout, and Micaëla enters, frightened but determined to find him. She hides at the sound of a shot, fired by José as a warning to Escamillo, who has come looking for Carmen. The two men start to fight but are separated by the gypsies. Escamillo invites them all to his next bullfight and leaves. Remendado discovers Micaëla, who has come to beg José to return home to his ailing mother. Carmen dismisses him willingly, but José, convinced she wants to take up with Escamillo, vows to find her again after he has seen his mother.
In Seville’s Plaza de Toros, the crowd gathers for the bullfight, hailing Escamillo. He and Carmen declare their love, and he enters the ring. Carmen’s friends warn that José has been spotted nearby, but she defiantly remains in the square to face him. He enters and begs her to return to him, saying there is still time for them to start again. She replies that everything is finished between them, tossing his ring in his face as the crowd cheers the triumphant Escamillo. When Carmen tries to run past José into the arena, he stabs her, then falls by her body in despair.