Chris will unbedingt den Weihnachtsaußendekorations-Wettbewerb gewinnen, der jedes Jahr in seiner Straße unter den Nachbarn veranstaltet wird. Um seine Chancen zu steigern, lässt er sich auf einen Handel mit der schelmischen Elfe Pepper ein, die ihm auf wunderliche Weise erscheint. Dadurch werden jedoch die Protagonisten des bekannten englischen Kinderlieds „Die zwölf Weihnachtstage“ lebendig und die ganze Stadt droht, durch diese im Chaos zu versinken. Chris, seine Frau Carol und ihre drei Kinder setzen nun alles daran, Peppers Zauber zu brechen. Dabei stellen sie sich in einem Wettlauf gegen die Zeit teuflischen magischen Kreaturen, um Weihnachten für sich selbst und alle anderen zu retten.
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Corporate marketer Chris Carver makes his own hand-carved decorations for the local neighborhood Christmas decoration competition but has never won, thus being envious of his neighbor Bruce who repeatedly wins with inflatables and other inexpensive mass market decorations. Shortly before Christmas, he is laid off, leading to him desperately competing for the $100,000 prize given to the winner by Prism Cable. Seeking supplies, Chris and his youngest daughter Holly stumble across a mysterious Christmas shop called "Kringle's", filled with beautiful decorations and figurines. He buys a large tree-shaped zoetrope based on "The Twelve Days of Christmas". When presented with the receipt, Chris is urged to sign it by shopkeeper Pepper without reading the fine print. Using the new decoration, the family impresses at the competition. The next day, the images from the tree are gone and there are seven swans swimming in the family's pool. Chris blames Bruce for the act and returns to Kringle's with Holly, seeking replacements. Meanwhile, Chris's wife Carol is attacked at work by six geese laying and three French hens (wearing Frenchman costumes). Upon returning to the shop, they meet several living glass figurines in a Christmas village: Pip, Cordelia, Gary, and a group of carolers. They explain that Pepper is an evil Christmas elf who has tricked Chris into a Faustian bargain, and that they are all previous victims of hers. Chris has to find five golden rings held by the missing images, now alive, before 8 p.m. on Christmas Eve or else he will turn into a figurine as well. Chris and Holly acquire the first two rings from the two turtledoves and the three French hens. Then he rescues the figurines, taking them home in the village's clock tower, where he shows them to his family. At Chris's older daughter Joy's track meet, Pepper has the eight maids milking and ten lords leaping attack the family. Despite the chaos, they manage to retrieve the third and fourth rings. Joy, however, becomes upset when her father inadvertently insults a college recruiter, leading her and her brother Nick to accuse him of focusing on Christmas for his own sake and not letting them live their own lives. Back at home, Chris reveals what is going on, so the family resolves to help. Realizing that Pepper has the fifth ring, they set up a trap for her during the night of the competition, where everyone learns from Prism Cable's news program that the $100,000 reward is actually in taco coupons. After trapping Pepper and getting her ring, Santa Claus appears to send her back to the North Pole. When Chris presents the five rings to her, she taunts him, saying he needs more. As "five golden rings" is said eight times in "The Twelve Days of Christmas", the family realize they need 40 rings. Pepper then unleashes the remaining decorations (the nine ladies dancing are unseen) on the neighborhood. The Carvers scramble to get the rings, with Santa assisting them. Pepper then cheats by turning the clock tower forward five minutes, prematurely turning Chris into a figurine. The family only manages to get 38 rings, but Santa points out that Chris and Carol's wedding rings, made out of gold, bring the total to 40, turning Chris back to normal. Holly then has the other figurines returned to normal as her Christmas wish. Santa takes Pepper and all the former figurines except for Pip on his sleigh, saying goodbye to the Carvers. On Christmas morning, the Carvers enjoy their free tacos with Bruce and his family, as Chris made amends with him. Pip then arrives, wishing to not spend Christmas alone, and is welcomed by the family. One week later in the mid-credits, Pepper is then shown to have been turned into a glass figurine by Santa as punishment where her good behavior will get her back to the reindeer poop-scooping rank. Chris has gained ownership of Pepper's store, now renamed "Chris Kringle's".
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