It's Christmas Eve, and all the citizens of Elmore are in a festive mood. Many characters wish the viewers a merry Christmas, including the Wattersons, who are driving home in their car. Their high spirits are abruptly brought down, however, when they crash into someone. This "someone" turns out to be a filthy bum that looks strikingly similar to Santa Claus, at least in Richard's opinion.
They rush the stranger to the hospital, with Richard voicing his worry about being on the naughty list this year. He decides to make up for it with several last minute good deeds, running around the hospital and making a huge mess. Richard, being completely unqualified for even the simplest first aid procedures, causes much more harm than good. After blowing up a senior citizen, the doctor finally gives Richard his diagnosis of the situation: he is obviously not Santa, has no ID, has lost his memories, and must be taken care of by the man who ran him over. Nicole fiercely objects to having a filthy homeless man in her house on Christmas Eve, but the kids, who believe this man to be Santa, beg their mother to reconsider. She relents, and allows the stranger come home with her.

Back at the house, Richard ushers Santa in, attempting to make up for running him over. Nicole follows Santa closely, sweeping the trail of grime he leaves behind and covering the chair before he sits down. At the same time, Richard surrenders everything he owns to Santa, giving him his house, his cookies, even his wife. At the mention of the latter, Nicole tells her husband to go somewhere else for a while. She then rushes to the bathroom to wash Santa, telling the kids to burn anything he touches with his filthy hands. The kids, still believing this to be the real Santa, help him to get his memories back.

They take him to a mall, kick the fake Santa off his chair, and put the real Santa in his place. The kids figured that this is what the real Santa does: have kids sit on his lap and tell him what they want. Anais does just that, asking for several extravagant things. Santa calls her spoiled, causing her to storm out and start hitting stuff. Darwin asks for world peace, but Santa replies that such a thing would be impractical. That ticks Darwin off, causing him to join Anais in smashing stuff. Gumball asks to sit on Santa's lap, to which Santa curtly denies, causing Gumball to join the other two. Finally, Santa asks for a cookie, and is loudly denied his request by the other three. Now all four of them are ravaging the mall.

The scene cuts to the four of them, angrily avoiding each others' gaze while driving home in a dead silent car. Gumball breaks the silence by trying to bring the group together again. Everyone starts apologizing, then they group hug. Nicole is annoyed by this; she scolds the kids for apologizing to the homeless man instead of apologizing for causing thousands of dollars worth of damage at the mall. She sighs, wishing for a normal family with a normal husband that doesn't run around like a maniac for the sake of a fat, fictional man. As she drives away, Richard runs out into the street and attempts to wash the next car to pass...while it was going forty miles per hour. The driver, who turns out to be Principal Brown, stops abruptly, and the tree that was tied to the roof of his car flies off. It hits Rosie's reindeer decoration and erupted the entire thing into flames, causing the poor little bunny girl to cry as Richard wishes her a merry Christmas.

Later on, the three kids try to push the bum up the chimney. Nicole then decides to tell her kids the truth. She drains out their Christmas spirit as soon as she tells the truth about Santa. She tells them the story about when she was a little girl and always sent Santa a letter for only one thing she wanted, but over time she kept sending letters and never got her gift and just stopped believing. When she finishes, she turns around and sees that Anais, Darwin, Gumball and Santa are gone. She goes outside and yells that she's sorry. The Watterson kids sing a sad song about Christmas being cancelled.

Meanwhile, Richard is in a neighborhood putting graffiti on a fence and pretending to find it and clean it up, but a police light and siren go off, scaring him. He jumps the fence and finds Santa's sleigh and a reindeer. He believes he can save Christmas and gets on the sleigh, trying to make the reindeer fly. When it does not, Richard smacks its butt and it shoots off. Below the sleigh, the homeless man, Gumball, Darwin, and Anais stop in front of the Wattersons' house and Gumball asks if the man wanted to come in for a cookie. He declines, thinking he had already been too much of a burden. As he is thanking the kids for believing him to be someone special, he is knocked out by a present. The kids look up at their dad, but look back at the homeless man when they realize he was actually Santa.

Santa asks them if it was still Christmas Eve, and when Gumball tells him it was, Santa thinks it was not too late as long as he had his sleigh. At that moment, the sleigh comes down and nearly hits him, but he, Darwin, and Anais duck. Gumball does not, however, and gets stuck to the bottom of the sleigh. Nicole is in the park looking for her kids to apologize when she sees the sleigh. She quickly runs after it. Richard pulls him to the top of the sleigh. Santa tells them to asks the sack for walkie-talkies so he could tell them how to land. After a little trouble, they get the walkie-talkies and throw one to Santa, who tells them to fly with their guts. The two nearly crash, so Santa tells them to asks for some parachutes and jump, but Richard and Gumball refuse because of what that would mean for Christmas.

Anais and Darwin begin collecting Christmas lights. Anais tells Richard and Gumball not to worry and tries to plug up them up, but they're too short. Nicole takes the plugs and forces them together, causing Richard and Gumball to see a runway for the sleigh to land. They are excited, but the lights flicker off and they panic. Nicole tells them not to worry because they were Christmas lights. The lights begin flickering on and off. The sleigh lands and Santa praises Blitzer. He then tells Nicole that he been looking for her and explains the situation: that all of the letters she had sent had been addressed to the South Pole as opposed to the North Pole where he lived. He had been in the neighborhood making sure he had her correct address when they ran him over. Richard apologizes, but Santa tells him not to worry because he would be on the nice list forever for the landing. Richard is pleased and tells Santa he owed him $800 for the hospital bill. Santa ignores him and gives Nicole her present: small plush toys similar to her family.

Santa thanks the kids for believing in him and begins to leave, but Richard stops him and smacks Bltizer's behind again. Some families leave their homes because of the noise and Gumball tells them that Christmas was back on, and they cheer, ending the episode.