The narrative primarily revolves around six central figures: Gordon, a Lieutenant of the Royal Scots Fusiliers; Audebert, a French Lieutenant in the 26th Infantry who is also the reluctant son of a general; Horstmayer, a Jewish German Lieutenant serving in the 93rd Infantry; Palmer, a Scottish priest acting as a stretcher-bearer; and the renowned German tenor Nikolaus Sprink alongside his Danish soprano lover, Anna Sørensen.
The film opens with schoolboys fervently delivering patriotic orations that extol their nations while denouncing their adversaries. In Scotland, two brothers, Jonathan and William, enlist to fight, accompanied by their priest, Father Palmer. Meanwhile, in Germany, Sprink is interrupted mid-performance by a German official announcing a reserve call-up. Audebert gazes at a photograph of his expecting wife, left behind in occupied France near his trench, and braces himself to enter the battlefield.
As Christmas approaches, the Scots and French forces launch a combined attack on the German trenches in France. The assault results in catastrophic losses on both sides but fails to alter the course of trench warfare. Tragically, Jonathan is forced to leave his mortally wounded brother, William, behind in no-man's-land during their retreat. In the chaos, Audebert loses his wallet—containing the cherished photo of his wife—in the German trench.
In Germany, Anna obtains permission to perform for Crown Prince Wilhelm of Prussia, and Sprink is granted leave to accompany her. They share a night together before taking the stage. Following the performance, Sprink grows resentful of the generals' lavish lifestyle far from the front lines, and he resolves to return to his comrades to sing for them. Although wary of Anna’s decision to join him, he ultimately relents.
An unexpected truce comes to life as the Scots begin to sing festive melodies from home, joined by the pipes. Sprink and Sørensen reach the German front line, where he sings for his fellow soldiers. In a touching scene, as Sprink performs "Silent Night," he is accompanied by a Scottish piper. Encouraged by this moment, he emerges from his trench brandishing a small Christmas tree and serenading "Adeste Fideles." Following his lead, officers from the French, German, and Scottish armies convene in no-man's-land to agree on a temporary ceasefire that night. Soldiers exchange greetings of "Joyeux Noël," "Frohe Weihnachten," and "Merry Christmas," along with gifts like chocolate, champagne, and photographs of loved ones. Horstmayer returns Audebert's lost wallet, which rekindles memories of their lives before the war. Father Palmer holds a Latin mass for the soldiers, leaving an indelible impact on all present. However, Jonathan remains detached, consumed by grief for his brother.
On Christmas Day, officers share coffee and resolve to "bury their dead on the day Christ was born." Later, a spirited football match ensues between the soldiers. However, the next day, as they seek refuge from the barrages, the captains recognize it is time to part ways. With the impending realities dictated by their superiors, the soldiers must prepare to face the consequences of their brief camaraderie. Returning to their trenches after an allied bombardment, Sprink and Anna request that Audebert take them prisoner to remain together.
As Father Palmer is sent back to his parish, his regiment faces disbandment as a form of disgrace. Despite showcasing the benevolence of the truce, his message falls on deaf ears, as the bishop instead preaches an anti-German sermon to recruits, labeling Germans as evil and commanding them to slay their enemies. Disturbed, Father Palmer departs while removing his Christian cross.
Back in the trenches, the Scots face the wrath of a furious major, who orders them to execute a German soldier attempting to enter no-man's-land. The soldiers, united in their refusal to kill, fire a warning shot above the soldier’s head. Yet, driven by vengeance, Jonathan shoots the man, who turns out to be Ponchel, Audebert's local aide, stealthily disguised as a German. As he lies dying, Ponchel reveals bitingly mundane details about his life, including a heartfelt coffee visit with his mother, and shares the existence of Audebert's newborn grandson, Henri.
In the aftermath, Audebert faces a punitive transfer to Verdun and clashes with his father, the general, displaying no remorse for the acts of camaraderie at the front. He expresses disdain for civilians and superiors who talk of sacrifice while being unaware of the hellish existence in the trenches. His father implores both to survive for Henri.
On a nearby train, Horstmayer and his men receive news from the Crown Prince about their impending deployment to the Eastern Front, denying them the chance to see their families one last time. Enraged, Horstmayer watches as the Prince destroys his harmonica, implying he is undeserving of his Iron Cross. As the train sets off, the Germans softly hum a Scottish carol they had learned from their Scots comrades, "L'Hymne Des Fraternisés" or "I'm Dreaming Of Home."
