Two years have gone by since the previous adventure and now, Kate Pierce (Darby Camp) is a jaded pre-teen. This holiday season, she's stuck in Cancún, Mexico, with her mom Claire (Kimberly Williams-Paisley), her brother Teddy (Judah Lewis), her mom's new boyfriend Bob (Tyrese Gibson), and his son Jack (Jahzir Bruno). Discontented with the sunny beaches and yearning for a snowy Christmas at home, Kate decides to escape and make her way back to Boston.
In her quest, she jumps onto a shuttle that Jack sneaks into, but little do they know they're not heading home. Instead, the shuttle driver, Belsnickel (Julian Dennison), a mischievous Christmas elf, takes them straight to the North Pole. Here, they are rescued by Santa Claus (Kurt Russell) himself, who along with Mrs. Claus (Goldie Hawn), warmly welcomes the children into their magical world. Santa gives them a tour of the bustling village and they soon settle down for dinner.
As the night unfolds, an ominous threat lurks; Belsnickel, resentful of being overshadowed by Santa, unleashes chaos on the village. He recounts a tragic backstory where Mrs. Claus shares how Santa, in his youth in Turkey, saved the elves and acquired the magical Star of Bethlehem, an artifact with the power to pause time and enhance Christmas spirit. Unfortunately, Belsnickel, once an accepted part of the Claus family, turns rogue after feeling neglected and ultimately takes the Star, plunging the village into darkness.
With the elves driven to frenzy, the holiday spirit diminishes and a snowball fight ensues, giving Belsnickel a strategic opportunity to flee. Determined to restore joy, Santa and Kate travel to Turkey to seek the aid of the forest elves led by Hakan (Malcolm McDowell) to create a new star. Meanwhile, Jack ventures out to find a root to cure the crazed elves, leaving Mrs. Claus behind to attend to the injured Dasher.
With perseverance, Santa and Kate find the elves who craft a new star casing, but their return flight is intercepted by Belsnickel, who now rides a sleigh pulled by his genetically engineered jackalotes. He intends to use a time-travel device disguised on Santa's sleigh to transport them back to 1990 Boston. As Jack successfully retrieves the root and hurries back, Kate finds herself at the airport desperately trying to snaffle some AAA batteries for the device. Her efforts land her in a tight spot with security due to a money mix-up; however, she makes a new friend in a fellow lost child named Doug (Sunny Suljic) who helps her escape.
Realizing Doug is the spirit of her late father, Kate regains her Christmas spirit. With the help of a kind airport staff member named Grace (Darlene Love), the two organize a spontaneous Christmas song to rally everyone’s spirits. This uplifting spirit enables Santa to restore their flight, allowing them to reclaim the star.
Back at the North Pole, Mrs. Claus ingeniously turns the root into a powder, enabling Jack to unleash it onto the frenzied elves, finally calming them down. As chaos reigns, Mrs. Claus crafts an explosive gingerbread cookie, strategically placed to thwart Belsnickel's advances. Ultimately, Kate reinstates the star atop the village Christmas tree and brings back the warmth of holiday joy. In a moment of reconnection, Santa presents Belsnickel with a heartfelt gift—the first toy they ever created together, leading to Belsnickel's transformation back into an elf.
In the closing moments, Santa escorts Kate and Jack back to Cancún where they excitedly recount their magical experiences to Teddy, and Kate embraces her evolving relationship with Bob. The family then joins together with all the North Pole inhabitants in a merry rendition of "O Christmas Tree," marking a heartfelt conclusion to their adventure.
