For Christmas, Carl gives Homer a DVD player and the first season DVD set of Magnum, P.I. However, Homer forgets that he is Lenny's secret Santa and gives him a pack of Certs out of desperation. Instead of giving bonuses, Mr. Burns gives everyone a cafeteria voucher and Homer a Joe DiMaggio rookie baseball card for Bart. To get money for Christmas shopping, Homer gives the card to Comic Book Guy, who gives Homer everything in his cash register. With their small fortune, the Simpsons go shopping at the Springfield Heights Promenade. Homer promises to buy a massive Christmas tree that will cause mudslides and flooding when it is removed. However, he instead spends the tree money on a Personalized Talking Astrolabe.
Homer gets shunned by his family when they find out. While staying up late at night, Homer watches Mr. McGrew's Christmas Carol and comes to realize just how selfish he is. Homer decides to reform his ways and become the nicest guy in town. Homer's acts include giving hobos his old clothes, giving Lenny a photo cube, giving Marge the last pork chop (causing her to break down in tears of joy) and building a skating rink in the Simpsons' backyard (to the delight of Comic Book Guy). After Gil Gunderson's comment of "Homer, you're the nicest man in town!", and Nelson Muntz's comment of "Haha! Your position has been usurped!", the actions cause jealousy to stir in Ned Flanders.
Flanders finds himself barely able to control his anger. He decides to buy everyone in town a Christmas present (and gets the money by renting out his house to a fraternity). Homer begins to think of beating Flanders by buying everyone a car. However, Lisa tells him not to and that, as a Buddhist, she believes people would be happier without presents. This gives Homer the idea to do what he thinks would be the ultimate good deed: steal Christmas. In the morning, an angry mob led by Cookie Kwan and Drederick Tatum confronts Homer. The mob calms down when they see a star which they think is a sign from God (it is actually a flare from Hans Moleman). Homer gives everyone back their presents (Professor Frink accidentally got a bra which is clearly a mistaken present) and the entire town sings "Hark! The Herald Angels Sing", ignoring Moe's annual unsuccessful suicide attempt and Snake stealing Homer's radio clock.
References to other Christmas specials
- Christmas with the California Prunes parodies the California Raisins, who appeared in A Claymation Christmas Celebration.
- The Year Santa Got Lost, which Homer briefly sees on TV, is a parody of the Rankin/Bass stop-motion Christmas specials. The character of Mr. Mailman is based off of S. D. Kluger from Santa Claus is Comin' to Town, and several of the Misfit Toys from Rudolph the Red-Nosed Reindeer (including the Spotted Elephant, Dolly, and Charlie-in-the-Box) make cameo appearances.
- Mr. McGrew's Christmas Carol is a parody of Mister Magoo's Christmas Carol.
- The scene of Homer stealing all the presents parodies How the Grinch Stole Christmas!
- The closing scene of the cast singing "Hark! The Herald Angels Sing" mirrors the closing to A Charlie Brown Christmas.
The episode made its home video debut on The Simpsons Christmas 2 DVD, released in 2004. It was made available again on The Simpsons: The Fifteenth Season DVD and Blu-ray sets, released on December 4, 2012.