After stopping at one of his favorite houses on Santa's delivery list, Scott Calvin realizes that the twenty eight years he's been on the job has flown by. To make matters worse, his magic begins to falter. Scott trains to get his Santa mojo back, but the following Christmas things only get worse.

Scott learns that, by way of the Secessus clause, he can retire, but he must find a worthy successor before doing so. Torn between wanting to retire and not wanting to leave the North Pole, Scott taps his children as possible candidates. He quickly realizes none of them are interested in the role, but instead want to know more about the world outside the North Pole.

Scott interviews potential Santa candidates while the family gets ready to leave. Simon Choksi, one of the candidates, brings his daughter, Grace, with him to the North Pole. During Simon's interview, Sandra and Grace go missing. In finding their daughters together, Scott realizes Simon is the best choice to take the coat.

Scott adjusts to life in Chicago, unsure what his identity is now that he is not Santa. Meanwhile, Simon settles in at the North Pole. He learns he can use Santa's delivery system year round for his e-commerce company, but in doing so he further diminishes Christmas spirit. Scott and the family get ready to spend their first Christmas together, but before they can, Scott is met by an unexpected visitor.

Scott is taken to the Yule-verse where he learns the truth about how he came to be Santa. Meanwhile things at the North Pole get worse as more elves disappear and Christmas spirit is all but destroyed. Scott returns from the Yule-verse and, with Noel, heads back to the North Pole to save Christmas. Before he can, he is quickly captured by Simon. Carol, Cal and Sandra race back to the North Pole to help Scott.

The Calvins race against Simon to find the Santa coat in order to save Christmas. Simon realizes the error of his ways and steps aside to let Scott be Santa again. The elves return and everyone hustles to get this year's Christmas deliveries pulled off in time. Scott takes his family on the delivery run, then they return to retake their place as the first family of the North Pole.