Act I — A town square in Seville, Spain
Moralès and his soldiers pass their time reading and playing dice. Micaëla appears, looking for her fiancé, Corporal Don José. She is told that José will arrive with the changing of the guard. Micaëla departs. Lieutenant Zuniga and Don José arrive for the changing of the guard. The midday bell rings, and the women who have been working in the factory come outside for their break. Among them is Carmen, who entrances all — except Don José. Carmen throws a flower at him and returns to the factory.
Micaëla returns with a letter from Don José's mother. Suddenly, sounds of a fight are heard in the factory. Women burst loudly into the square, and Carmen is accused of wounding her co-worker with a knife. José is ordered to arrest Carmen. Once they are alone, Carmen convinces José to help her escape. Don José unties Carmen and she flees. José is arrested.
Act II — Lillas Pastia's tavern
At the end of a dance, Zuniga tells Carmen that José has been released after a month in prison. The famous bullfighter Escamillo arrives. He is immediately attracted to Carmen, but she refuses his advances. The smugglers Remendado and Dancaïro enter. They ask Carmen, Frasquita, and Mercédès for their help on a smuggling mission. Carmen refuses, saying again that she is waiting for Don José, her true love.
Don José arrives and Carmen dances for him. When Don José tells Carmen he must return to the barracks, she mocks him and accuses him of not loving her; if he did, he would leave the army and join her in the mountains. Don José tells her he loves her but that he must go. Zuniga bursts in. The two men brawl. Zuniga and Don José are restrained, but now that Don José has attacked his superior officer, he has no choice but to leave the army and join the smugglers.
Act III — A mountain hideaway
The smugglers are on their way to the border with their stolen goods. There is tension between Carmen and Don José. They have an argument and Carmen joins the women, who are using cards to tell their fortunes. For Carmen, the cards foresee only death.
Don José is left behind to guard stolen goods at the camp. Micaëla enters searching for Don José, but she hides when Don José fires his gun at an intruder. It is Escamillo, searching for Carmen. Don José is furious, and they fight. They are interrupted by Carmen and the other smugglers. Escamillo departs, inviting everyone — especially Carmen — to his next bullfight in Seville. Micaëla is discovered and reveals that Don José's mother is dying. She begs him to return home. Carmen urges him to go. Don José decides he must leave, but he warns Carmen that they will meet again.
Act IV — Outside the bullring in Seville
Carmen escorts Escamillo as an excited crowd cheers the bullfighters. Frasquita and Mercédès warn Carmen that Don José has been seen in the crowd. Don José finds Carmen alone and pleads with her to forget the past and start a new life with him. Carmen tells Don José that everything between them is over. When Don José tries to prevent Carmen from joining her new lover, she loses her temper. She angrily throws down a ring that Don José had given her. Enraged, Don José stabs Carmen as the crowd cheers Escamillo's victory.