The film begins with a house. Where Fritz has set up a trap and is catching a mouse with his sister Clara. As soon as the mouse is caught in their trap. Their maid comes. She calls them down. Their father Stahlbaum comes there. He gives them gifts from their mother. Louise says it’s not Christmas Day yet. He says that his mother wanted him to give them this gift on Christmas Eve. Children are very happy to receive the gifts. They begin to see their gifts. Clara opens her present it is an egg-shaped object which is locked. There is no key in the box to open it. She comes to her room. There is a letter in the box from her mother. She opens the letter and reads it. Her mother has written that her gift contains everything she needs. She is confused and not happy. Stahlbaum came to her room and explains to Clara that Christmas is a day that comes every year whether we like it or not but we have to enjoy it. Louise also arrives in Clara’s room. She is wearing her mother’s dress. Stahlbum looks towards Louise. She is just looking like her mother. Stahlbum asks Louise to help Clara in getting ready because they are going to a Christmas party. Louise is helping Clara in getting ready. Clara kept looking at the egg which was a gift from her mother. Clara sees the alphabet D written on it. She quickly understands. It means that it was made by Drosselmeyer. Clara was happy because they are going to Drosselmeyer’s party. On the way, their father tells them that they should behave well at the dinner and he wants to dance with both of them and especially Clara so that she doesn’t disappear today.
They arrive at the party. Everyone is celebrating. Clara goes downstairs to Drosselmeyer. Drosselmeyer asks Clara to help him in fixing a toy because its mechanism was not working properly. Clara looks at the toy carefully and immediately fixes the toy. She showed the egg to Drosselmeyer and asked about the key. Drosselmeyer sees it and says that he made it for a smart girl. He meant Clara’s mother. He further explains that when her mother first came to him, she used to spend the whole day in her room. She did not trust anyone. Drosselmeyer had made it for her mother and he kept it outside her room, which she slowly began to believe. Clara asks him about the key. He says some locks are harder to select than others. The bell rings and he tells Clara to go upstairs. Drosselmeyer asks his owl to watch over her.
Everyone gathers in the hall. Drosselmeyer makes a speech and presents them with their gifts. Everyone rushes outside, rejoicing in their gifts. Clara is also going out when her father stops her. He is angry because of her disappearance. Clara says that she doesn’t want to dance. Her father replied that she always thinks of herself only. This made Clara angry and she replied that her father have also just thought about himself and she leaves. Clara starts looking for her gift. She sees her name and follows her rope. The rope takes her to a new place. She reaches the Christmas Tree Forest. Clara begins to take her gift off the tree. She sees her gift. It is key, she thinks that it might be the same key she is looking for. Suddenly a mouse comes and runs away with the key. Clara runs after the mouse. Mouse runs in the forest. Clara followed the mouse. That mouse runs to the other side of the lake. As Clara tries to pass the frozen lake, it began to crack. Clara stops and looks for a way. She sees a bridge. Clara comes to the bridge. There is a Nutcracker in his booth. As Clara starts to cross the bridge, Nutcracker wakes up and stops her from crossing the bridge. When Clara tells him her full name. He immediately bows his head. He tells Clara that his name is Captain Phillip and that her mother, Marie Stahlbaum, is the queen and Clara is their princess. He tells Clara it’s dangerous to cross the bridge as it is the fourth realm and there is a war going on. Clara says she has to go that way anyway and orders him. He takes Clara to the other side on a horse. Clara sees the same mouse there and Clara runs after it. As soon as Clara approaches the mouse, it goes under the ground. Suddenly many mice forming a shape attack Clara from behind. They tried to take Clara with them. Just then Philip comes there and saves Clara. Philip asks Clara to leave because that place is not safe for her. Clara hears a voice. It is Mother Ginger’s voice. Mother Ginger tries to stop Clara but Philip tells her that it’s a trap and that Mother Ginger doesn’t like intruding.
He brings her to the palace. The palace guards stop her at first, but when they hear Clara’s name, they panic and immediately allow her to enter the palace. Clara enters the palace. All bow down to Clara. There were pictures of Clara’s mother everywhere. Clara goes inside the palace. Philip is with him. Hearing Clara’s name, all the regents stand up. The regent started to introduce themselves, Hawthorne the Regent of the Land of Flowers, Shiver the Regent of the Land of Snowflakes, and Sugar Plum the Regent of the Land of Sweets bow on her arrival and ask her about her mother. Clara tells that her mother has died. They all get worried after hearing this tragic news. They take Clara to her mother’s throne. Sugar Plum asks Clara if she has come to save them. Clara denied it and says that she didn’t know about this place. She tells them about the events that happened to her after coming here. Philip explains how they managed to get here after escaping the Mouse King and Mother Ginger. The Regent says that it was her fate that she have survive the Fourth Realm as no one has managed to get out from the fourth realm. The regent says they should hold a pageant to celebrate Clara’s arrival. Clara says that she has to go back to the party. The Regent tells her that there is a big difference between Realm and World time and Sugarplum takes her to another room to see. They have a very large dial. The same as Drosselmeyer used to have. Sugar Plum ask Clara to stand still and the dial started to move. As the dial turns around. They came out in a wall clock. Clara looked at the party everyone is dancing and enjoying but everything is moving very slowly. Sugar Plum explains that time in their world runs slower than in the Realm. Sugar Plum brings Clara to another room. She asks her to get ready for the pageant. Sugar plum also helps. Clara looks so cute. On the occasion of the pageant, everyone looks at Clara. The pageant begins. That pageant is about his mother Marie. How her mother discovered this world. She sees all the realms one by one including the fourth realm. Sugar Plum tells her that before her mother’s discovery, they were all just toys, and children play with them. But her mother gave them life and made him. She takes Clara to another room where she shows Clara the engine built by Marie, with the help of which she has created all these worlds and infused them with life.
After which emotions like happiness, sadness, anger, and love emerged in them. Sugarplum adds that according to their spies, Mother Ginger is on the warpath. The engine is the only way they can protect themselves by building an army. But there is a key in it which is held by Clara’s mother. Without it, it does not work. Clara takes out the egg from her and they both have the same lock. Clara tells that the key has been taken by that rat. Clara says she will go to the Fourth Realm and bring the key. Philip says it’s dangerous. Clara says maybe that’s why her mother sent her here. Clara sleeps at night. Clara remembers the Christmas she spent with her mother. When her mother told her that she has created a world and infused the toys with life, she tells her that Clara will also see this world. Clara goes to the roof as she misses her mother. She says that she doesn’t know if she will be able to get the key and if she can’t do that, the world discovered by her mother will end. She wishes her mother with her so she could tell her if she is doing the right thing or not. A star breaks from the sky and passes through its sky. She hopes that she is doing the right thing. The next day Clara prepares the army. She is in military uniform. Sugar Plum is also there. She says that she cannot join her due to some personal reasons and she goes into the palace. The soldiers who stopped Clara while she was coming into the palace are also standing and volunteered to join. Clara tells the army to leave and walks out of the palace. They go in search of the mouse king in the forest. They arrive at Mother Ginger’s clown. The whole army is afraid to go inside. It is extremely foggy inside. Clara dismounts and walks in by herself. The army also starts following him. Suddenly the soldiers start sinking into the ground. They all jump on the carousel. Clara turns on the lights. Mice also break the carousel from the bottom. Clara jumps off the Carousal. Mouse king picks her up and takes her to mother ginger. Philip follows him. Clara goes inside the clown. Inside, the jokers tease her and push her into a chair. The chair moves up. Clara sees the key hanging in front of her. As Clara tried to remove the key. Mother Ginger arrives. Clara tells her that her mother is dead. Mother Ginger takes the key in her hands. Meanwhile, Philip also arrives. As Mother Ginger is distracted, Clara presses the lever and descends with the key. Ginger continues to fend her off, but Philip and Clara both run away. Clara gets out and stops some distance away and opens the egg. It was just a music box. Clara is disturbed to see that the Music box has a mirror on the other side. Clara doesn’t understand anything. She gives the key to Philip and tries to leave on her own, but Philip stops her. They both go to the palace. Sugar Plum is extremely happy to receive the key. She immediately turns on the engine. She immediately orders put tin soldiers on the platform. Philip says she can’t use them because they don’t know the behaviour of tin soldiers. Sugarplum doesn’t listen and puts tins soldiers on the platform and activates the engine. Suddenly they come to life. Sugarplum orders them to march on the Fourth Realm. Clara counters that her mother would never want that. Sugarplum’s ugly face emerges and she orders the tin soldiers to arrest Clara. Clara, Philip, and the other two regents are arrested and locked in a room. Clara is sad and says that all this happened because of Philip. Clara keeps looking at the same magic box and remembers the words of her mother. Suddenly, seeing her in the mirror, her mind clicks and she understands what her mother is saying. She asks Philip for help. Drops a chandelier from a rope. They all come out. Clara ties herself with the rope. On the other hand, tells Philip to throw the rope over the pole according to the laws of physics and she jumps. The rope slips through the pole and they all come down. Clara and Philip are hiding in the room watching Sugarplum. Suddenly a mouse comes. It is as if the mouse wants to say something to them. Clara understands and asks the mouse for a way to the engine room. The mouse takes them through the underground sewers to the engine room. Clara tells Phillip to go to Mother Ginger and tell her about the battle and climbs off the side of the hill herself and turns off the engine. Philip approaches Mother Ginger and tells her everything. Ginger is coming towards the palace. Clara tries to sneak into the engine by distracting tin soldiers with the help of toy mice in the engine room. On the other hand, Sugar Plum soldiers attack mother ginger’s clown. The clown manages to keep them busy for a long time. In the engine room, the tin soldiers discover Clara’s presence. The clown is shot down by the soldiers, but Phillip comes out in Ginger’s place. The soldiers are near to catch Clara but Ginger arrives and stops them. Sugarplum is waiting for ginger but Philip comes out from the clown. Sugarplum looks towards the engine and she immediately comes to the engine room and captures Ginger with the help of tin soldiers. Clara hides under the engine. She modifies the engine and comes in front of Sugar plum. She explains to Sugarplum that her mother would never want that, but she doesn’t agree and said that her mother was their queen and the queen left her people alone. Meanwhile, in the forest, the soldiers are near to killing Philip. Sugarplum tells the soldiers to put Ginger on the platform. As soon as she runs the engine. Beam turns to Sugarplum instead of ginger and turns her back into a toy as she watches. Along with this, tins soldiers also lost their lives. Clara and Ginger hug each other.
A feast is laid for Clara the next day. Everyone is very happy. Philip comes to drop Clara off. Soldiers are given duty at the place of Philip. Philip asks Clara if she will come to Realm again. Clara says she will come but Philip should come to her world and meet her family. They both say goodbye to each other and Clara comes back.
Back, Clara meets Drosselmeyer and tells him that she has done the job. Drosselmeyer tells Clara that her mother was undoubtedly the smartest inventor and that whenever he asked her about her best invention, she mentioned Clara’s name. Clara smiles and comes out to meet her father. She apologizes to her father but her father apologizes to her for his behavior. Clara takes out the music box from her pocket and asks her father to dance. As the song plays, her father remembers that this is the same song he danced to with her mother for the first time. Clara and her father start dancing. With that, the film ends.