Act I
It’s the night before Christmas in 19th-century Russia, and Marie, Misha, their parents and their beloved nursemaid Baba are busy preparing for the annual Christmas Eve party at their country estate. As the curtain rises, Peter, the stable boy (and Marie’s and Misha’s best friend), is sweeping the barn one last time before the guests arrive.
Marie and Misha burst into the barn, squabbling furiously despite the patient efforts of Baba and Peter to calm them down. Suddenly a rat scuttles across the floor, disrupting everything until Peter outsmarts it. Four neighbouring families arrive and the dancing begins.
All of a sudden, a mysterious man dressed in red appears in a sleigh. It's Nikolai, the unpredictable uncle who lives down the road, whose alarming spins and flamboyant gestures both terrifies and delights the company. Magically he tweaks bright fresh oranges from the guests’ ears, hats, and clothes as well as producing a pair of dancing bears, one of them on skates. To crown everything, Nikolai unhitches his old mare and, to everyone's amazement, they energetically dance together.
Nikolai has brought special gifts for all the children, but after all the presents have been handed out, there is nothing left for Marie. Quickly Nikolai gives Marie a Nutcracker in the shape of a handsome soldier which he'd intended for her parents. The continuing hostilities between Marie and Misha erupt once more as they fight over the Nutcracker until their father confiscates it.
Baba takes Marie and Misha back to the house to put them to bed but inevitably their skirmishes begin again¬¬ – this time, it's a competition to see who can stay awake the longest. Eventually they fall asleep and their magnificent dream begins.
Just as the clock strikes twelve, six pesky little mice scurry in but Nikolai, stranger and wilder than ever, dashes out and scares them away. Taking pity on poor Marie, he returns her Nutcracker, tucks it beneath the nursery Christmas tree and vanishes from sight.
Ominously, the children's beds begin to rock and shake waking Marie and Misha. Their Christmas tree has come to life and the Nutcracker has grown, his features have somehow been transformed to look exactly like their friend Peter.
Other toys, too, have magically come to life and a regiment of wolfhounds rides in, only to be vanquished by demonic cats. Then an evil brigade of mice invades the room to attack the cats. Meanwhile, the cruel Tsar of the Mice challenges the Nutcracker to mortal combat and all seems lost.
With the ingenuity of despair Marie and Misha save the Nutcracker by combining forces to banish the frenzied cats and dogs and they conquer the Tsar of the Mice with their feather pillows. In relief and sheer exhaustion, Marie, Misha and the Nutcracker collapse on the bed.
The bed begins to move again but this time it carries them on a magical journey. Through ice-laced trees and feathery snowflakes they see the Snow Queen, supported by two Icicles. Marie, Misha, and the Nutcracker dance joyfully with the snowflakes and the Snow Queen bestows upon them a magnificent gift: a beautiful ice-boat attended by unicorns.
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Act II
The ice-boat carries the children and the Nutcracker to the secret Kingdom of the Sugar Plum Fairy, who lives in a beautiful Fabergé egg at the centre of a golden palace, carefully guarded by her loyal courtiers. Nikolai and Baba, transformed into the Grand Duke and Duchess, are there to greet them.
Naturally, the courtiers are eager to discover how their unexpected guests happened to find the palace and beg the Nutcracker, Marie, and Misha to recount their marvellous adventures. As a reward for the children's courage and compassion, the courtiers order a splendid banquet that mingles grown-up food with childhood favourites.
The first course, much to the children's delight, is Chocolate, with a delicate Spanish flavouring. The second, Coffee, heralds the pleasures of adulthood – and oddly enough, quite the opposite of anyone's expectations, its sinuous fumes put the child-courtiers to sleep! Embarrassed by the courtiers’ inattentiveness, Misha and Marie wake everyone up just in time to enjoy the spectacle of four inept royal chefs trying to catch the poultry course.
There follow two dances that hint at the loving nature of parenthood: a bright, cheerful Trepak for the Nutcracker and a dance for Baba as a shepherdess with lambs and a Sheep-princess pursued by a Fox.
At last four zany Waiters bring in a magical table while the chefs attempt to put the finishing touches on the great repast. When the feast is finally prepared, Marie and Misha assume the places of honour and enjoy a food fight in what may be their last chance to misbehave as young children. Suddenly all traces of winter have gone, and the palace gates burst open to admit a single Bee and a host of Flowers to dance in the warm spring breeze.
In the midst of all this excitement, Marie and Misha have noticed that the Nutcracker has fallen deeply in love with the Sugar Plum Fairy. All at once the world of the Sugar Plum Fairy begins to vanish and the children find themselves in their own room being put to bed by Baba. As Marie and Misha fall back to sleep just before daybreak, the Nutcracker and the Sugar Plum Fairy bid them goodbye. Somehow during this night the children have passed together through the magical yet natural portal between childhood and adolescence, and somehow they know that their lives will never again be quite the same. Henceforth, like their friend the Nutcracker, they will set forth to find and follow their own dreams.
— Penelope Reed Doob
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