The Nutcracker is a holiday fairy tale about a young girl, Clara, and her very favorite Christmas. Her Godfather, Drosselmeier, is a magical, mysterious character in her life. This Christmas he has a special gift for her, a beautiful Nutcracker doll. She received the present from him at the annual family party. Very excited about the new doll, Clara 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 Drosselmeier's magic, her dream begins. She's suddenly woken by mice and the Mouse King appears and tries to kidnap her and take her to his kingdom. Clara looks everywhere for her Nutcracker, but he is gone. Suddenly, the Christmas tree grows to an enormous height and everything seems out of proportion. Finally, soldiers appear, and behind them is the Nutcracker. He has come to save her from the Mouse King. First, he must fight the Mouse King. His soldiers and the Mouse King's mice go to battle. After an exhausting exchange, the Nutcracker defeats the Mouse King. Clara has found her Prince.

Appearing through the smoke, comes the Nutcracker Prince who has come to take her away to his special land and to show her his magnificent palace. Their journey takes them through the enchanted land of the Snow Queen, Snowflakes and Candyland, where they meet sweets from around the world. They are met by the Sugar Plum Fairy and the beautiful waltzing flowers. Clara does not want to leave her Prince or Fantasyland, but on Christmas Day she awakens under the Christmas tree with all her new friends gone and her family around her.

Clara is left with the Nutcracker doll and wonderful memories of her most magical Christmas.