Hunger haunts the house of the broom maker Peter and his wife Gertrud. The two parents do not have the means to provide for their children Hansel and Gretel. Yet despite their impoverishment, the siblings let nothing spoil their good cheer: they sing and dance with great enjoyment instead of completing the chores their parents have tasked them with. When a pot of milk gets broken, their despairing mother chases them off into the forest, telling them to collect berries for supper there. A short while later, the father returns home laden with goodies after successfully concluding some business affairs. He is struck with a sense of foreboding when the mother tells him the whereabouts of the children. He fears that they might encounter the dangerous Witch who lives in the forest. Filled with fear, the father and mother set off to search for the children.
In the forest, Hansel collects berries while Gretel idly sings »There stands a little man in the woods«. The children’s gaiety gives way to fear as darkness falls. They can no longer find the way home. Hansel and Gretel hear eerie noises and feel themselves to be surrounded by sinister figures. They find protection in sleep, brought to them by the Sandman. Angels appear in their dreams.
The Dew Fairy rings in the new morning. The siblings see a tempting-looking house made of sugar, home to the Witch. Filled with evil intentions, she places the children under her spell in order to eat them. Yet the two children manage to overcome the Witch and free a hoard of other children who had fallen into her clutches. The parents of Hansel and Gretel are reunited with their children. Together they all celebrate their victory over the Witch.