In a small German town a hundred years ago, guests are arriving at thee house of Dr.Stahlbaum who is giving a Christmas Eve party. As the guestsenter the comfortable parlor, we can see their excitement. Clara is a slightly shy, and dreamy girl. Fritz, however, is a little scamp.
Sometimes they quarrel and their parents have to step in as mediators. Tonight, however, they are united in their admiration for the Christmas tree which fills one end of the parlor.
As we watch, gifts are exchanged and children play with their new toys. Although the little girls try to behave, the boys get rowdy and have to be hushed by their eiders. Another guest arrives. This is Drosselmeyer, Clara's godfather. Don't need this. His fingers are as agile as a magician’s in performing and conjuring tricks. He is also a clockmaker and an inventor who knows how to fashion all sorts of mechanical marvels. He has brought some to the patty : life-sized dolls which, when they are wound up, jump and dance and whirl about. Everyone is fond of Drosselmeyer, but there is something decidedly mysterious about him. He gives Clara a strange present nutcracker shape like a little man. It is a seemingly grotesque toy for a little girl, but Clara falls in love with it. When Fritz sees it he decides he wants it for himself. Pulling it away from Clara, he breaks it in the scuffle. Clara is heartbroken, but Drosselmeyer fixes the toy and dries her tears.
One Last dance brings the party to an end. The guests depart and the Stahlbaum children are sent off to bed. Clara cannot sleep, however, and she tiptoes downstairs for a peek at her nutcracker. Clasping it in her arms, she curls up on the sofa and dozes off.
As the big clock in the parlor strikes midnight Clara awakens. How strange the parlor looks at night in the dark! Sinister shadows cross the floor and Clara even imagines she sees Drosselmeyer in the face of the clock. Suddenly the room is invaded by ugly, nasty ad horrid mice. They scurry hither and thither. They start to attack Clara, but suddenly Drosselmeyer appears. He tells her that the Nutcracker will keep her from harm and then disappears again. Suddenly, the Nutcracker come to life and the room is filled with a curious glow. The Christmas tree begins to grow up and up and rises until the star at its tip bursts through the ceiling. The Nutcracker leads toy soldiers into battle against the mice and the Mouse King, but is overpowered by the vicious mice vicious. Clara picks up a sword and runs at the Mouse King in a frenzy, mortally wounding him.
The mice carry off their king and leave Clara with her broken, lifeless Nutcracker. Now comes the greatest magic of all. The nutcracker comes to life, but is no longer a toy! He is transformed into a handsome prince and he promises to take Clara to an enchanted realm. Clara and her prince find themselves in a forest of snow-covered trees, and as the couple passes through the forest the first act comes to an end.
The curtain opens on the Palace of the Sugarplum Kingdom. Surrounding a throne of marzipan and gumdrops, royal sentinels await the return of their beloved Prince. The Nutcracker Prince arrives with Clara in a magical sleigh, and he tells the court how the fearless Clara killed the Mouse King and saved his life. They are greeted by other members of the court, including the beautiful Dewdrop Fairy. The Nutcracker Prince rewards Clara with grand entertainment. Dancers come from far away places : China, Arabia and Spain, for example, just to perform for Clara. Most impressive of all is the dance of the Sugarplum Fairy and her Cavalier.
All parties, however, even magic ones come to end. And finally, the Sugarplum Fairy tells Clara it is times to go home. In the wink of an eye, she is home, back on the parlor sofa. It has all been a dream. Or has it?