The main alteration from the original is that the setting has been moved from 19th-century Germany, where E. T. A. Hoffman's original story took place, to early 20th-century San Francisco. According to the San Francisco Examiner, the context is a city rebuilt after the 1906 earthquake and excited about the Panama Pacific International Exhibition, which celebrated the opening of Panama Canal. The backdrop to the ballet features elements of that World's Fair-style exhibition that was held in the Marina District, with temples and ziggurats and other fantastic structures.

The story itself is set in a Painted Lady, one of San Francisco's famous Victorian row houses. Other changes to the original include an older version of Clara, which has become a more significant dance role. Her uncle, Drosselmeyer, has been "considerably rethought," and Drosselmeyer's nephew (who traditionally turns into the Nutcracker Prince) has been eliminated.

The only section remaining from the previous production is the Trepak, a dance for three men choreographed by Anatol Vilzak, a former SFB teacher.

According to the Examiner, the new production was prompted by a recent fall-off in ticket sales the increasingly worn sets and costumes, by now 18 years old, of the previous production. That version, the company's fourth, was choreographed by former company director Lew Christensen, with additional choreography from Willam Christensen, the company's founder and former artistic director, and Tomasson.

The first complete American Nutcracker was performed by SFB in 1944, 10 years before George Balanchine's version debuted at New York City Ballet.

The company's 2005 season is Tomasson's 20th with the company. He previously choreographed such classics as Swan Lake, Sleeping Beauty, Giselle, Romeo and Juliet, and Don Quixote.