The King of the seven heads appears to Maria and asks for her candy in exchange for leaving the Nutcracker alone. She agrees. The Nutcracker asks Maria for a sword.

Maria is feeling better. Godfather Drosselmeier visits the children. He tells them the story of Princess Pirlipat and the Krakatuk nut. Young Drosselmeier undoes the enchantment of Princess Pirlipat, and Lady Ratilda condemns him to live as a nutcracker. Only the love of a true friend can rescue...