The Nutcracker is a holiday fairy tale about a young girl, Clara, and her special Christmas. Her Uncle, Drosselmeyer, is a magical, mysterious character in her life. This Christmas, he has a special gift for her, a beautiful Nutcracker doll. She receives the present from him at the annual family party. After finding out that it can crack nuts, her sister Louise tries it out and breaks it. Clara is upset and the party halts until Drosselmeyer fixes the Nutcracker.

Clara is excited about the new doll, and she wants to stay up all night with it, but her family sends her off to bed. After everyone has left and the family is asleep, Clara sneaks downstairs to look at her Nutcracker doll. She eventually falls asleep, and with a little help from Drosselmeyer's magic, her dream begins.

Mice suddenly wake her and the Mouse King appears and tries to kidnap her and take her to his kingdom. Drosselmeyer reappears to making everything bigger, the Christmas tree, the toy soldiers and the Nutcracker, all to protect Clara. After some mischief from the Mice and Soldiers, the Mouse King battles with the Nutcracker. With help from the Soldiers and Clara, the Nutcracker defeats the Mouse king and sends him and his mice away.

Drosselmeyer turns the Nutcracker into a prince and presents him to Clara. The Nutcracker Prince sweeps Clara away to his special land and to show her his magnificent palace. Their journey takes them through the Enchanted Land of the Snow and The Land of Sweets, where they meet sweets from around the world.

The Sugar Plum Fairy, Arabian dancers, Russian dancers, Chinese dancers, Marizpan, Bon Bons, and the beautiful Waltzing Flowers meet them. The festival concludes when everyone comes together on the court and bids Clara and the Nutcracker Prince farewell. She tells the Nutcracker she wishes the adventure would never end and he tells her it won’t for those who have an eye to see it.