Elmo stays up on Christmas Eve to meet Santa Claus. He falls asleep, but is awakened by Santa stuck in the chimney. Elmo helps pull out Santa, who offers him either a teddy bear or a magical snow globe as a gift. Elmo chooses the globe and is granted three wishes, wasting the first on a glass of water.
On Christmas Day, Elmo wishes for Christmas to be every day, but Santa warns him that Christmas would no longer be special. Lightning, a reindeer-in-training, takes Elmo to the future to see the effects of his wish. Big Bird is sad that Snuffy does not return from visiting his grandmother in Cincinnati, the businesses remain closed, It's a Wonderful Life plays continuously on every TV channel, Santa's overworked elves make flawed toys, and other holidays are overshadowed. Meanwhile, Oscar the Grouch enjoys the increasing misery.
By next year's Christmas, everybody is tired of celebrating, Christmas trees are endangered, all the businesses are bankrupt, and Santa is retiring to Florida. Elmo uses his last wish to make Christmas be once a year again, but breaks his snow globe before the wish is granted. Fortunately, Lightning takes him back to the Christmas Eve when he rescued Santa, and Elmo chooses a plush "Moo-Bunny" as his new gift. Snuffy returns, telling Big Bird that his grandmother came to Sesame Street instead. Elmo learns that, although Christmas does not occur every day, everyone can keep their Christmas spirit alive in their hearts all year.
