It's nearly Christmas, and thus Scott Calvin (TIM ALLEN), a.k.a. Santa Claus, is quite the harried figure at the North Pole. That's not only because he and head elf Curtis (SPENCER BRESLIN) are trying to get all of the toys ready for delivery, but also because Scott's pregnant wife Carol (ELIZABETH MITCHELL) is going to deliver their child any minute.
Since they're otherwise surrounded by elves, Carol longs for additional human contact, especially in her state. Accordingly, Scott arranges for her parents -- Sylvia (ANN-MARGRET) and Bud (ALAN ARKIN) -- to be brought to the North Pole, but only as long as everyone agrees to mislead them -- in order to protect Santa's identity and whereabouts - into believing they're actually visiting Canada.
Scott's niece Lucy (LILIANA MUMY) pleads to come along, resulting in her parents -- Scott's ex-wife Laura (WENDY CREWSON) and her husband Neil (JUDGE REINHOLD) -- accompanying her. However, things get even more complicated when an emergency council meeting is called. That's when Santa, Mother Nature, the Easter Bunny, Cupid, the Tooth Fairy, Sandman, and Father Time learn that Jack Frost (MARTIN SHORT) wants his own holiday.
The others want to ban Jack, but Scott gives in and agrees to allow him to serve as his assistant. However, that allows Jack to learn of "the escape clause" where the latest Santa can get out of the job if holding his magic snow globe and reciting a certain phrase. From that point on, Jack tries to disrupt both Scott's professional and personal life, thus not only threatening Christmas, but also Scott and Carol's marriage.