A brilliant set of variations based on the themes of the dance performed by the gypsies at Lillas Pastia's inn at the beginning of Act II of Bizet's opera Carmen, and the subsequent 'Gypsy Song' of Carmen and her companions. Composed during his early career while touring Russia with violinist Milstein, it was inspired by Sarasate's Carmen Fantasy, which was one of their repertoire pieces. This work, a full display of Horowitz's virtuosity, was often performed as his encore piece and thrilled audiences.

He recorded three different versions at intervals of approximately 20 years.