In 1920s Vienna, during the Christmas season, Mary lives with her parents Joseph and Louise, and younger brother Max. While Joseph and Louise attend a party on Christmas Eve, Mary's uncle Albert arrives and gifts both her and Max a dollhouse and "NC," a nutcracker doll whom she takes a liking to. That night, NC comes to life in front of Mary and grows to human height. NC tells her that he must talk to his friends in the dollhouse, which is in the sitting room by the Christmas tree. They go downstairs and Mary finds that the sitting room has grown to such size that they appear to be the height of toys. In the dollhouse, Mary meets NC's friends; Gielgud, a gentlemanly chimpanzee; Tinker, a pernickety opera-singing clown; and Sticks, a Jamaican drummer boy.