Jack Frost (Martin Short) has been causing all kinds of mischief, so the Council of Legendary Figures call an emergency meeting and decide to put him under Santa's care for Christmas. Not the best of plans, as he has free reign to cause more chaos, and using a magical snowglobe tricks Santa (Tim Allen) into wishing he never put on the Jolly Man's red coat.

Tim Allen, while back in an alternative reality, travels to the North Pole - which Frost as Santa has turned into a giant amusement park. Using a digital voice recorder pen, he captures Frost making a wish, then with the help of Lucy (his ex-wife's daughter) finds the 'make a wish' snowglobe and the clock is put back again.
  This time Tim wrestles with Jack Frost to stop him from putting on the Santa jacket and changing history.
  Back in the proper future/present, Santa apologises to his pregnant wife to make amends, and shows his parents-in-law the toy factory.
  Lucy finds her parents in the back room, still frozen, but Jack Frost refuses to help. Using her "magical gift", she hugs Frosty, melting his heart and out from his icy-shell appears a choirboy with a nice, new, white suit. Without his spell holding them, the parents are free.
  All the legendary people and little elves then work tirelessly to get the toys out on time for midnight.