In 1911 we find ourselves at an auction where some stuff of the Paris Opera House is being auctioned. One of the buyers is the now 70-year-old Raoul, Vicomte de Chagny. When the famous chandelier is auctioned he explains that it is connected to the story of the Phantom of the Opera. At this moment the chandelier lightens and we are thrown back in time.
We find ourselves in the midst of rehearsals where Monsieur Lefèvre, the retiring director of the Opera House, shows the new directors, Monsieur Firmin and André everything. While the prima donna, Carlotta, is singing, a poster falls down nearly killing her.
Carlotta refuses to sing on. Therefore Meg Giry proposes that her friend Christine Daaé could take over the part from Carlotta. Christine had taken some lessons with a mysterious, but obviously rather good teacher. During her first show Raoul is one of the visitors. He soon recognizes Christine as his childhood friend. After the show he invites her for dinner, but Christine refuses. Her teacher, “The Angel of Music”, would not allow her to accompany him, as he is very strict.
When Raoul leaves for a moment the Phantom appears to take Christine for some more lessons into the vaults of the Opera House. In his underground lair she sees a vision of herself in a wedding gown. She faints at the sight of it. Some hours later she awakes through the music made by the Phantom. Driven by curiosity she rips off his mask, that he is wearing all the time. Horrified he takes her back to the surface.
The Phantom sends notes to the managers and gives instructions that Christine should play the lead in the new opera Il Muto, but the managers refuse to do so. As a result to this and as a warning the Phantom kills the stage hand and Carlotta's voice is stolen.
During the chaos, Christine and Raoul leave to the roof, where they finally pledge their love to one another. Although they do not know, the Phantom is listening to their love whisper and is totally enraged. Therefore he causes the final disaster: the chandelier crashes to the floor.
Six months later a big Masquerade Ball is held. Raoul and Christine are secretly engaged and no one has heard anything from the Phantom meanwhile. During the Ball the Phantom appears, dressed as the Red Death. He hands the managers his score for “Don Juan Triumphant”. After a first refuse, they plan to use the opera as a tool to trap the Phantom using Christine as a bait.
Christine visits her father's grave, there she meets the Phantom who tries to make her join him. Raoul appears just at the right moment and takes Christine with him.
During the opening night the whole Opera House is surrounded by police guards, eager to catch the Phantom. As the show comes to the end the Phantom takes the part of Piangi, the lead, and escapes together with Christine into the underground.
There he has finally also caught Raoul, threatening Christine to kill him. Christine is given just one choice. Either she marries the Phantom, then Raoul would be released or, if she refuses, the Phantom will kill Raoul. Her decision brings to an end the story of The Phantom of the Opera.