Act I Soldiers keep watch over the town. Micaela is looking for Corporal Jose, but he is not in this particular platoon. The guard changes at the cigarette factory, and Jose explains to Zuniga, a new officer, about the women who work in the factory, whose “parade” in their mid-day break has become a tourist attraction. However it is Carmen for whom everyone is really waiting, but she notices only the man who appears not to notice her: Jose. Micaela finds Jose and gives him a letter from his mother. Although Carmen’s presence has profoundly disturbed him, he resolves to follow his mother’s advice and marry Micaela. An uproar breaks out in the factory, and Zuniga sends Jose to investigate. He discovers that Carmen has attacked another woman. Zuniga orders Jose to escort her to jail. While they are waiting for Zuniga to return with the warrant, Carmen seduces Jose, and he agrees to let her escape. They arrange to meet at Lillas Pastia’s bar.
Act II Jose has been demoted and sent to prison, but today he will be released. Zuniga is at Lillas Pastia’s bar, fruitlessly trying to interest Carmen. The Toreador Escamillo passes by to advertise the forthcoming bull-fight, and he too shows an interest in Carmen but she rejects him. The two smugglers, Remendado and Dancairo need Carmen to help them with their next heist, but she refuses: a gypsy pays her debts, and she is waiting for Jose. Jose arrives and Carmen dances just for him, but she is interrupted by the roll call. Jose must return to barracks, but Carmen’s life-style cannot comprehend such obligations. Just as Jose finally decides to go, Zuniga reappears. Jose attacks him and thus ruins his army career. He now has no choice but to turn to crime.
Act III Carmen and Jose’s relationship has broken down. Jose is still torn between his duty and his passion, and Carmen foresees that their affair will end in death. Dancairo requires the girls as decoys to distract the border guards. Jose is left on guard. Micaela and Escamillo both converge on the deserted base, seeking Jose and Carmen respectively. Micaela hides as Jose confronts and fights Escamillo, who would have lost his life had Carmen not returned in the nick of time to save him. He invites her to his next bull-fight. Micaela is discovered and begs Jose to return to his dying mother: he reluctantly agrees.
Act IV In an exuberant carnival atmosphere, everyone prepares to watch the bull fight in one way or other. Carmen is warned that Jose is in town, but she is determined to face him. In their final confrontation, Jose demands that she return to him, and she demands to be free. Jose kills her.