Nicolo Bussotti (Cecchi) is a violin maker who is married to Anna Rudolfi (Grazioli), pregnant with their first child. Anna is worried about her own health, as her pregnancy at her age may mean complications, but Nicolo is confident, saying that he has the best people available when she is due for delivery. Anna sees her servant Cesca (Laurenzi) with questions about her child's future, Cesca uses a form of tarot cards to determine this. Cesca cannot determine the future of someone not born, but she does offer to read Anna's future instead. Anna chooses five cards, and Cesca's first card signifies that Anna would live a long life. In the meantime, Nicolo has fashioned a new violin, one that he considers his masterpiece, with the hopes that their child will become a musician. He is about to varnish this violin when a boy comes, sent by the doctor attending to his wife. Anna had developed complications during childbirth and neither she nor the baby survived. Distraught, Nicolo brings her body back to his violin shop and begins varnishing the violin he had created for their child. It is later revealed that this violin would be the last one Nicolo would make. Much later in the film, it is revealed that the varnish contains some of his beloved wife's blood, giving it its distinctive red colour and is painted with a brush made from her hair.
Throughout the film, we see Anna and Cesca talking about Anna's future, when in fact, she is talking about the journey the Red Violin would make, as it is her blood on the violin.
Cesca predicts the second card means disease and suffering for those around Anna (in essence, the violin).
At the orphanage, the violin comes under the possession of Kaspar Weiss (Koncz), a young but brilliant violin prodigy. A violin instructor, Poussin (Bideau), arrives to assess the boy's talents and he is asked by the monks at the orphanage to adopt the boy to further his development. Weiss and the violin travel to Vienna, where Poussin introduces him to his wife, who complain they cannot afford to raise the boy. Poussin is convinced that Weiss's talents would mean prosperity for Poussin's household: Prince Mansfeld (Denberg) is due to visit Vienna and is looking for a prodigy to entertain him on his travels to Russia. Such a trip would likely mean success for Weiss and a generous payment for Poussin from the monarchy. To prepare for the recital, Poussin has Weiss undergo a strict practice regimen assisted by a device Poussin calls his "Poussin Meter" (which in fact is a primitive metronome). Poussin has Weiss practice his piece slowly, then builds up the tempo of the piece to the point where he can play it at a fast tempo.
However, Weiss has a heart defect, the strict practice regimens are taking a toll on him, and he is attached to his violin to the point of sleeping with it. When Poussin tells the boy not to sleep with his violin, his heart starts to have issues and a doctor is summoned, Weiss's heart stopping for a full minute. On the day of the recital, Mansfeld shows an interest in the violin instead of the child to the point of offering to purchase it, but allows the child to play to assess his talents. Just as he is to start playing his piece, Weiss's heart gives out from the stress and he collapses, dead.
Weiss is buried at the orphanage he grew up in, and Poussin inquires about the violin, seeing how he would like to sell it to Mansfeld. The monks explain that the violin was buried with Weiss so he "could play it in heaven". The violin is later stolen by grave robbers travelling in a gypsy procession, where it is handed down, and played by several generations of gypsies, spanning another century before being taken to England.
In the present day in 1997 the monks of the orphanage want to return the violin to where it was first played. They attempt to bid via telephone on the violin when it goes on sale at an auction house, but pull out when the bidding price reaches $500,000.
Cesca predicts the third card means seduction at the hands of the person she could only consider to be the devil.
Frederick Pope (Flemyng) comes across the gypsy procession setting up camp in his own backyard, a female gypsy playing the violin. The gypsies rush to leave immediately, but Frederick has a different idea, he wants the violin instead, and offers sanctuary for the gypsy procession in addition to viewing one of his concerts. However, on the day of the concert, Frederick is having trouble coming up with a piece to play at the concert and sends for his girlfriend, Victoria Byrd (Scacchi). Frederick and Victoria perform sexual intercourse in his suite which inspires him to come up with a new piece to play at the concert. Frederick's inspirations for his music come from his sexual encounters with Victoria, and thus has enabled himself to be a talented composer. Victoria, meanwhile is an author who obtains her inspirations for her work through travel, and announces to Frederick that she needs to leave on a journey to Russia to find inspiration for a novel she is working on.
After Victoria leaves, the two lovers write letters to each other but while Victoria is being inspired to write her novel, Frederick has lost his inspiration to compose his music. Frederick's condition begins to deteriorate as he starts to be bedridden while smoking opium. Frederick starts to cancel concerts soon afterwards as he has lost his will to play, and stops writing letters to Victoria. When Victoria does not receive his letters for a full week, she resolves to return to Frederick immediately and sends one more letter stating so, but Frederick has stopped reading her letters. When Victoria arrives at Frederick's residence and hears him playing passionately, she knows he is getting his inspiration in someone else's arms. With gun in hand, Victoria bursts into Frederick's room when he is having intercourse with the female gypsy violinist. In a moment of rage, Victoria shoots the violin, the bullet grazing and damaging the neck of the violin. The tail-piece and strings come loose as the red violin spins out of Pope's presumably shattered hand. Victoria rushes out in a fit of anger.
Frederick's final letter to Victoria states that he will be committing suicide and that he is leaving his entire estate to her. The violin however, ends up in the hands of Frederick's Chinese servant and he takes it back to Shanghai where he sells it to an antiques dealer. The violin is repaired, but a small jewel is removed from the violin's scroll work. It goes on display in the shop for over three decades, before being sold to a young woman with her daughter during the 1930s.
In the present day in 1997 a representative from the Pope Foundation (dedicated to Pope's music) arrives at the auction hall to "reclaim" Lord Pope's violin. He attempts to win the auction on it but becomes the final bidder to pull out when the bidding reaches $2.4 million.
With the Chinese Communists in power during the Chinese Cultural Revolution, various items deemed unsuitable (or "foreign") to the Communist ideals are being burned. One of these items includes a violin under the possession of Chou Yan (Liu), a music teacher. He is brought before a gathering where he is berated for his possession of the violin, and his fondness for classical music. One Communist party member, Xiang Pei (Chang) attempts to defend Chou by suggesting he teach Chinese music, since he also plays the huqin, a remark that arouses the suspicions of her husband. Chou's violin is taken from him and tossed into a bonfire containing other "four olds".
Xiang returns to her residence and starts disposing of all of the "foreign" music in her possession as she can no longer keep it due to her loyalty to the Chinese Communist Party. She uncovers the Red Violin which was previously sold to her mother. At this point, her young son Ming walks in to the room and Xiang starts to explain the violin to him, even playing a piece for him. She tells Ming not to tell anyone about its existence, and tells him to go find his father. At that moment, Xiang realizes that her own son cannot be trusted and she cannot keep the violin a secret and resolves to find Chou to give it to him to keep. Meanwhile, Ming finds his father, and inadvertently lets slip of the existence of the violin. Xiang's husband and several Communist Party members arrive at the residence to see Xiang gone, and a wastebasket containing all of her "foreign" music on fire. He also sees a picture of Xiang's mother, who was an accomplished violinist.
Xiang arrives at Chou's house and pleads with him to take the violin to keep it safe, even resolving to smash the violin if he cannot do so. He relents and resolves to keep its existence a secret, while Xiang returns home to face possible prosecution from Communist Party officials. Many years pass and Chou dies at his home due to natural causes, surrounded by the many antique musical instruments he has kept safe over the years; Chou's home had become a "sanctuary" for these historical instruments. The cache is discovered when police, acting on a complaint from a neighbour, find his dead body in his house. Upon this discovery, the present-day Government of China (far removed from the years of the Cultural Revolution) ships these items to Montreal where they can be appraised and sold at an auction.
Filled with regret over what he had done to his mother, a much older Ming arrives at the auction house in 1997 to bid on the violin his mother once kept as a secret. He pulls out when the bidding reaches $1.2 million.
The final card Cesca sees does not predict death, but due to the positioning (the death card is seen upside down), she sees it as something else, as a rebirth.
The actual movie initially starts with Charles Morritz (Jackson) arriving at Duval's auction house to witness the sale of the Red Violin. Throughout the movie, we see the various parties representing the different eras as seen in the film vying for the Red Violin. When the scene does finally shift to Montreal, we see a flashback of the events leading up to the auction.
Morritz arrives in Montreal as an appraiser for the violins sent by the Government of China. Almost immediately he notices the Red Violin and he has his assistant Evan Williams (McKellar) perform some work with it. To verify if it is the Red Violin, he has some varnish samples sent to the lab at the University of Montreal. Thinking that this may be the legendary last Violin of Nicolo Bussotti, he comes up with an idea to purchase a copy of the Red Violin from a private collection in London, the closest copy to the original available (apparently commissioned by Frederick Pope himself before his death). At the same time, a wealthy concert violinist named Ruselsky (Bogajewicz) arrives looking for the Red Violin. He sees it and tries it out, but Morritz convinces him that it is not the Red Violin. When the varnish samples test positive for blood, he realizes that he has indeed found the Red Violin. At the same time, the manager of the auction, Leroux, (Mercure) and the lead auctioneer (Feore) confront Morritz about the expenses he has incurred and ask him the purpose of his inquiries. Morritz gives in and lets them know that the violin in question is indeed the Red Violin. Ruselsky is furious at this discovery as he believes that the violin should have been his.
Using his own funds, Morritz has Williams buy the copy from London, and it arrives in time for the auction, Williams authenticating that it is indeed the closest copy to the real thing. With this, Morritz heads to Duval's, passing by the Pope foundation member in the process (recreating one of the first scenes in the film). He sees Ruselsky and they exchange glances, Ruselsky still furious at Morritz's deception. As the auction for the previous item winds down, Morritz, with Williams acting as a distraction, switches the Red Violin for its copy, accidentally dropping the auction tag in its storage area. As the copy is being sent to be bid on, Leroux notices that the tag is missing, and is about to call security when Williams finds the tag. As the monks in Germany, the Pope Foundation member, Ming, and Mr. Ruselsky bid on the copy, Morritz rushes out, nearly getting run down by a car in the process. Ruselsky eventually beats out the other three bidding competitors for the copy. On his way back to the airport, Morritz calls his wife at home in New York City and asks to speak to his daughter telling her he has a present for her upon his return.
The concept of the movie bears a very strong resemblance to that of the novel Antonietta by John Hersey.