As the Krank family grapples with their empty nest syndrome after their daughter Blair departs for a Peace Corps mission in Peru, parents Luther and Nora are confronted with the unsettling challenge of passing the holiday season without their cherished daughter. In a bid to fill the emotional gap left by Blair, Luther reflects on the substantial amount of $6,132 they splurged on decorations, gifts, and entertainment during the previous year's festive celebrations. Inspired by this revelation, he proposes a radical alternative: instead of indulging in their usual holiday traditions, they should treat themselves to a ten-day Caribbean cruise. After some contemplation, Nora agrees, and the couple sets off on an unorthodox journey, choosing to entirely forego the holiday celebrations.
Yet, their decision stirs outrage among the neighbors, who interpret the Kranks' refusal to partake in the festive activities as a personal insult. Vic Frohmeyer, the self-declared leader among the neighborhood, feels compelled to spearhead a campaign enforcing that the Kranks decorate their home, while Walt Scheel's motivations appear to stem from a personal grudge against Luther. This friction complicates things further as it is revealed that Walt's wife, Bev, is battling cancer, shedding light on Walt's rather gloomy holiday spirit.
Children from the neighborhood, spearheaded by Vic's son Spike, continuously pressure the Kranks to showcase a Frosty the Snowman decoration on their front lawn. Additionally, Christmas carolers take it upon themselves to revive regular holiday cheer by serenading outside their residence. In response to the mounting pressure, Luther resorts to icing his front yard, further reinforcing their commitment to abstaining from the festive season.
Meanwhile, the local newspaper catches wind of the Kranks' unconventional holiday stance, featuring a front-page article paired with a photograph of their unlit home, which only adds to the annoyance expressed by Luther's coworkers, tree vendors, and law enforcement fundraisers accustomed to the seasonal cheer.
As the clock ticks down toward Christmas Eve, panic arises for Luther and Nora when they learn that their daughter Blair is returning unexpectedly, this time with her fiancé Enrique from Peru. With merely twelve hours left until their surprise guests arrive, the couple must urgently prepare their home and organize a party, all while maintaining the facade of normalcy. Nora races to find food, while Luther embarks on a quest for the perfect Christmas tree. Unfortunately, he returns with a dried-up sapling, leading him to raid their neighbor Wes Trogdon's house in search of a lush, indoor tree. Armed with Trogdon's keys, Luther enlists Spike's help to transport the tree across the street; however, their plans complicatedly unravel when nosy neighbors misconstrue their actions and alert the authorities. A tense showdown unfolds, only deflated by Spike showing proof of Trogdon’s permission to borrow the tree.
In the meantime, Nora returns empty-handed, clutching only a disappointing smoked trout, which does little to uplift their spirits. In a last-ditch effort to instill some holiday cheer, Luther attempts to install Frosty atop their rooftop, a mission that goes awry, resulting in both he and Frosty crashing down, much to the intrigue of their observant neighbors.
As the much-anticipated party begins, it becomes evident that Luther’s frantic efforts stem from a heartfelt wish to surprise Blair, who remains blissfully unaware of the chaotic events that unfolded. Enrique offers his appreciation for the warm welcome, while Nora expresses her gratitude to the community for their steadfast support. However, when Luther delivers an uninspired toast, Nora confronts him about his lack of enthusiasm and attempts to steer him back toward their planned cruise. Yet, Nora stands firm, feeling slighted by Luther’s dispassionate demeanor regarding Blair's return.
As the night progresses, an unexpected change sweeps over Luther. He slips away into the night and crosses the street to check on the Scheels, where he finds Walt and Bev wrestling with the distressing news of Bev's cancer recurrence. Moved by their situation, Luther generously offers to care for their cat and take their spot on the cruise, allowing them to spend one last holiday together. Initially hesitant, the couple ultimately accepts his offer, rekindling Luther’s spirit for the season.
As the evening winds down, Nora proposes reconsidering their plan to skip Christmas entirely—a suggestion that resonates deeply with Luther, who finally acknowledges that their decision to abandon cherished holiday traditions was indeed a significant oversight.
