Opening Credits: The title, The Simpsons Christmas Special, appears on screen against a black snowy background and the camera pans down to start act one. No blackboard joke or couch gag.
The episode begins as Homer hastily drives Marge and Maggie, in the family car, through snow covered streets. They are late for Bart and Lisa's Christmas pageant at the school. Once at the school, Homer and Marge stumble through a full audience to find their seats; everyone looks on stage at the pageant that has already begun. Homer and Marge sit down just in time to see Principal Skinner introduces the second grade The does a presentation of different Santa Clauses from around the world, and Lisa steals the show as Towanga, the Santa Claus of the South Seas. Cut to Skinner introducing the fourth grade singing a medley of Christmas carols. As they all sing Jingle Bells, Bart can be heard singing rude, alternate lyrics to the song(Jingle Bells, Batman Smells) and Principal Skinner quickly yanks him from the performance with intent for a vicious reprimand. Homer is upset that Bart has once again misbehaved at the Christmas pageant by embarrassing his family, although Marge took no notice of it. The pageant continues on, as a bored Homer wonders aloud how long the pageant will last.
Afterwards, at the Simpson home, Marge writes a letter for the Simpson family Christmas cards, as Homer gets out Christmas decorations, and Bart and Lisa write their Christmas wish lists. In the letter Marge describes how everyone is doing and as she reads the letter in her head the camera pans around to the different family members as she mentions their names. Bart and Lisa show Marge their wish lists. However, Marge is upset when Lisa once again asks for a pony for Christmas and hoped that Bart's letter would make more sense. However, she's dismayed and insulted when he proves to be just as unreasonable as Lisa when he asks for a tattoo. Both Homer and arge refuses to allow him to get one until he's old enough and making his own money. Just then Marges sister Patty calls; a grumbling Homer hands the phone over to Marge and the two sisters discuss their plans for getting together on Christmas Eve.
Cut to Homer, who is outside putting the finishing touches on the Christmas lights on the roof, as the kids watch from the sidewalk. After Homer falls from the roof, he calls out to Marge plug the lights in. Only a few of the lights actually light up, and Homer admires his handy work, while the kids are less than impressed. Ned Flanders is also outside, and ready to plug in his lights for the first time, he calls out to Homer and tells him to check it out. As he plugs the lights in his entire house lights up, including a talking Santa Claus on the roof. The lights illuminate everyones face and much to Homers dismay; his kids are very impressed at Neds display of lights.
At breakfast the next morning, Marge tells the kids to grab their money so they can go Christmas shopping at the mall. As the excited kids run off to get their money, Homer asks Marge where she has been keeping the Christmas savings. She makes him turn around and she pulls a big jar of money out of her hair. Homer is impressed at the amount of money they have for Christmas this year. Later at the mall, as Marge, Lisa and Maggie look at gifts together; Bart is off by himself, and comes across a tattoo parlor. In the window, he sees a tattoo of a heart with the word mother written across it. He daydreams that Marge will have a positive reaction to him getting a tattoo, so he runs inside the parlor, lies to the tattoo artist about his age, and hops into the chair.
Meanwhile, at the nuclear power plant, Mr. Burns announces over the loud speaker that there will not be any Christmas bonuses this year for unskilled workers; this includes Homer. Homer sighs as he remembers they still have the big jar full of money for Christmas presents.
Back at the mall, Marge hears Barts yells of pain coming from inside the tattoo parlor and she quickly runs inside to see Bart with the heart tattoo halfway finished on his arm. She quickly pulls him out of the chair and takes him to a tattoo removal clinic. The tattoo removal is expensive and requires a full cash payment up front. Marge has to use all the Christmas money for Barts tattoo removal, but she sighs when she remembers they still can use Homers Christmas bonus. Back at home, Marge tells Homer what has happened and Homer freaks out. She tells him to calm down, and that they will just have to stretch his Christmas bonus a little further this year. Homer fakes relief when Marge mentions his bonus, he tells everyone that this will be the best Christmas ever and steps outside for a walk. Once outside he looks up at his poorly decorated house and then at Flanders masterpiece. A depressed Homer hangs his head in despair.
That night in bed, Marge senses something is amiss with Homer and she asks what is wrong. Homer almost tells her the truth about his Christmas bonus, but quickly backpedals and instead offers to do the Christmas shopping, so she doesnt have to. Marge agrees and seems satisfied that there is nothing wrong and they both go to bed. The next day Homer does some Christmas shopping alone at a cheap thrift store. He purchases pantyhose for Marge, pads of paper for Bart and a squeaky chew toy for Maggie. On his way out the door with his bag of presents Homer accidentally crashes into Ned who has an armful of fancily wrapped packages. All the presents are spilled onto the ground, and as Homer picks the few he purchased and sees how many Ned bought, he becomes sad and depressed and heads over to Moes. At Moes, Homer drinks a beer alone, when a cheerful Barney walks in wearing a Santa Claus suit. Barney explains that he is in a good mood because he has extra money from working a part time job acting as Santa Claus at the mall. Homer suddenly has an idea. Cut to the personnel office in the mall, as Homer fills out an application and is interviewed to be a mall Santa. After reviewing Homers application, and interviewing him, the personnel director welcomes Homer aboard and sends him to mall Santa training s. A montage of Homer enduring Santa training ensues.
Homer finally makes it home late at night and a worried Marge wants to know where he has been. Homer ignores her and heads upstairs, but Marge tells him that her sisters are here and that he needs to visit with them. As Homer talks with Patty and Selma, they comment on the fact that the Simpsons dont have a Christmas tree up yet. Homer tells them he was just on his way out to get one, and he angrily hurries out the door. In the car, Homer drives past several expensive Christmas tree lots and finally stops at a private tree farm and uses a chain saw to steal a nice Christmas tree for the family. Back at home, Homer stands up the tree, and everyone is impressed except for Patty and Selma. On Christmas Eve at the mall, Homer works as Santa Claus, while children wait in line to sit on his lap. From a distance, Bart and Milhouse watch the kids line up to sit on Santas lap, they comment on how they cant believe that these kids are falling for the fake Santa bit. Milhouse dares Bart to yank off Santas beard and Bart agrees. Bart jumps in line and finally gets his turn on Santas lap. Not knowing that Santa is really Homer, Bart yanks off his beard. Bart is shocked at what he has uncovered, and an angry Homer escorts Bart inside Santas workshop to speak with him in private. Homer explains the situation to Bart, who understands and feels bad for yanking off Homers beard. At the end of the Homers shift, Bart goes with Homer as he picks up his check. Homer is surprised to learn that he has only made 13 dollars. When he questions the cashier, she explains the majority of his check went to pay for the Santa suit, social security, and etc. While a depressed Homer sits down to figure out what to do with the 13 dollars, an excited Barney tells Homer that he is going to the dog track to place a bet with his 13 dollars. He invites Homer to come along with him, Homer is reluctant but Bart convinces him to go, citing that this might be their only chance to save the Simpson family Christmas.
Back at the Simpson home everyone including Patty, Selma and Grandpa Simpson, wait for Homer and Bart to come home. Cut to the dog track, where Barney gives Homer a tip on a dog named Whirlwind. After seeing what Whirlwind looks like, Homer is reluctant to bet on him. Just then an announcement plays over the P.A. system, announcing that a dog named Santas Little Helper will be replacing another dog in the fourth race. Homer senses that the announcement is an omen, and decides to bet on him even though Bart recommends not to, and despite the fact that the odds are 99 to 1. Homer puts down all 13 dollars on Santas Little Helper. Meanwhile at home, Patty and Selma talk bad about Homer, while everyone still waits for him and Bart. Back at the track Homer and Bart anxiously await the running of the fourth race. As the race begins Homer and Bart cheer on Santas Little Helper, but Whirlwind, Barneys pick, is out to an early lead with Santas Little Helper bringing up the rear. Homer and Bart quickly realize their chances at winning any money are dashed, as Santas Little Helper doesnt even finish the race. Cut to Homer and Bart, out in the parking lot of the dog track, looking for discarded betting slips hoping to find that someone has thrown away a winner. Barney drives by in a convertible with a woman in the passenger seat, and gloats to Bart and Homer about his pick for the race: Whirlwind.
A dejected Bart and Homer head back to their car, when off in the distance they see a racing dog owner yelling and chasing off Santas Little Helper for losing once again. Santas Little Helper jumps up into Homers arms. Bart asks to keep Homer if they can keep the dog. Homer, reluctant at first, quickly warms up to the dog and decides to take him home. Cut back to the Simpson home, where everyone still awaits Bart and Homers return. Suddenly, a sad looking Homer enters in and starts to confess to everyone about the fact that he didn't receive his Christmas bonus, and apologizes for the lack of presents; when Bart bursts in, along with a barking Santas Little Helper. Everyone falls in love with the dog, and Homer realizes that in the end he has done a good job providing gifts at Christmas.
End Credits: The credits roll as the entire Simpson family including Patty, Selma, and Grandpa Simpson, sing Rudolph the Red Nosed Reindeer. Near the end of the song, Homer ends up strangling Bart for adding unofficial, rude alternate lyrics to Rudolph the Red Nosed Reindeer.