The film opens on Christmas Eve. Kris Kringle/Santa Claus (Bryan Brendle) enters a house to deliver presents. He is found by a little girl, Noelle (Oakley Bull). Kris jokingly asks the girl not to tell that she saw him, but we quickly learn that he is playing along, as Noelle is Kris's daughter. Her brother Nick (Owen Vaccaro) and their mother (Julie Hagerty) get together for their presents. Kris gives Nick a Santa hat, taking the time to reveal that he is picking Nick as his successor. The family is excited, but when Noelle asks what her job will be when she grows up, Kris states that she will essentially spread Christmas cheer to help Nick do his job properly. Noelle accepts but is visibly disappointed.
In the present, Noelle (now played by Anna Kendrick) works alongside Nick (now played by Bill Hader), who has taken up the mantle as Santa since their father passed away five months ago. Nick isn't particularly good at his job, constantly doing things like crashing the sleigh. They also work alongside their nerdy tech-based cousin Gabe (Billy Eichner). Noelle takes Nick through the ropes of being Santa, such as getting into chimneys, guiding the reindeer, and determining which kids are naughty or nice and what gifts they get. Nick gets so tired and stressed out, stating he could use a vacation. Noelle then suggests that he take the weekend off and pick any spot in the world to hang out and unwind. Nick likes the idea and takes her up on it.
The North Pole finds that Nick is missing, and they freak out at the prospect of Christmas going on without their Santa. When it's discovered that Noelle gave Nick the idea, everyone turns on her and shuns her, leaving her upset. The Christmas judges then pick Gabe as the new Santa per their guidelines. While talking to head elf and former nanny Polly (Shirley MacLaine), Noelle figures that Nick has gone to Phoenix, Arizona. They go to the sleigh and argue over going off to find Nick, but they accidentally get the reindeer to fly off and take them on a sleigh ride outside the North Pole. Once they arrive there, they are taken into custody. Gabe and Mrs. Kringle soon find out.
Noelle and Polly have to meet with a manager, Helen Rojas (Diana Maria Riva), to drop charges for supposedly soliciting on the grounds where they landed. Unfortunately, they can't get the reindeer to move, and Polly has to stay behind to watch them while Noelle goes off to find Nick by herself. She comes across a private investigator named Jake Hapman (Kinglsey Ben-Adir) to help her find him. Noelle tells the truth but comes off like a crazy person. Jake is cynical due to his divorce and having to share custody of his son Alex (Maceo Smedley). After helping Jake out with contacting Alex, she finds Helen and Polly, and then helps Helen connect with a handsome Petco manager that she has a crush on. This lets Noelle get store credit, and also a temporary place to stay.
Gabe begins to take over the naughty-or-nice determination using his new app FALALA. He believes that only less than 3000 kids in the world can qualify as nice due to a bunch of petty mistakes that slide them closer to the naughty side. The rest of the North Pole is not happy with these calculations.
Noelle goes to Jake's apartment and meets Alex. She gives him the store products as payment for the investigation on Nick. Jake says that no other major hospital, morgue, or prison has seen Nick, so they figure the last places to look are the shelters. She meets a deaf girl named Michelle (Shaylee Mansfield) and her mother. She charms the little girl and finds herself communicating in sign language, despite never learning it. They don't find Nick there. She continues hanging out with Jake and Alex, eventually finding that Nick is teaching at a yoga studio. On the way to find Nick, Jake expresses his insecurities as a single father to Noelle after they drop Alex off with his mom.
Noelle arrives at the yoga studio and shocks Nick when she shows up. They are excited to see each other until Noelle tells him that the situation at the North Pole is serious. Nick has little interest in going back, even as Noelle stresses how the pressure is on her to bring him back. She goes back to Polly and is found by her pet from the North Pole, a small reindeer named Snowcone. He brings her a message from her mom to tell her how Gabe is ruining the way they run things at the Pole. When they try to run back and find Nick at the studio, they find it closed until after Christmas. Snowcone helps Noelle track Nick to a park where they are doing silent meditation, which becomes less silent when Noelle tries to bring Nick back. He rebuffs her again until she leaves him the note from their mom.
Nick runs to the mall to find Noelle and Polly. He wants to help her but feels that he doesn't have the "twinkle" that makes Santa who he is. They pose as a mall Santa and elf to bring joy to kids. However, Nick finds it hard when he is met by grumpy children who found out they were naughty through Gabe's app. Meanwhile, Noelle tells Jake the truth about herself and her brother, but he doesn't buy it and leaves her. The other mall Santa that actually works there shows up, which leads to Noelle fighting him and a security guard, which gets her arrested.
The situation at the Pole gets worse, and the word of kids being denied presents becomes big news. Noelle is put in a psych ward due to her supposed delusions. She expresses her sadness over her lack of purpose as an adult and living in the shadow of her father and brother. She is bailed out by Jake, who is not happy that Noelle knew personal things about them (through magic), but is still thankful for her efforts to make Alex happy. Nick and Polly then reveal the flying sleigh to a surprised Jake (and the doctor). Jake lets Noelle escape on the sleigh.
The trio return to the Pole to have Nick re-assume his duties. However, Nick announces that he wants to pass on the mantle to Noelle. There are protests due to the thought of having a female Santa, but the elder elves decide that Noelle embodies all that makes a Santa - someone who inspires and spreads Christmas cheer. After delivering a heartfelt speech on what Christmas means to her, Noelle is officially declared the new Santa.
Noelle begins her duties, but gets very nervous as she prepares herself. She messes up several times, such as going to the wrong houses, and it brings her spirit down, making her think she is not as capable of doing the job the way her father did. She stops at the shelter and accidentally wakes up Michelle and her mom. Michelle acknowledges Noelle as Santa, and soon, the other patrons do too. This lifts her spirits and enables her to do her job better. She finishes by taking Jake to spend time with Alex and his ex-wife, as the boy had wanted the whole time.
With the North Pole doing much better, Noelle says that her life is even better now that she gets to give gifts instead of receive them.