The story itself is quite old, older than the one we see portrayed on stage, which is actually an adaptation by the French author Alexandre Dumas, possibly better known for such titles as The Three Musketeers and The Count of Monte Cristo.
The Nutcracker was actually Peter Ilich Tchaikovsky's final and least satisfying ballet, after he took on the project with a marked lack of enthusiasm. It is ironic then that it would be The Nutcracker that was to become one of the most beloved Christmas traditions.
But it was really George Balanchine who really set The Nutcracker on the path to popular fame. In 1954 he choreographed the ballet for a New York company, and not a year has passed since when the ballet hasn't been performed in New York City.