The special starts with Colonel Casey flying over Georgia to visit the cabbage patch where the kids are born. They're celebrating the birth of a new baby while learning about the "Christmas Spirit." Xavier Roberts, their caretaker, regails them in stories of how delightful the city is during Christmas time.
After Xavier leaves, the kids decide to venture into the city and visit the "Christmas Spirit" which they believe to be a visible entity. While trumping through the forest, they have an encounter with Lavendar McDade and her henchman, Cabbage Jack and Beau Weasel, who want to capture them and make them work in her gold mine. They decide to escape by hopping into a tree that's cut down and trucked into the city for Christmas.
The kids get to the city and find it full of Santas, carolers, toy shops, and snow that is unusually white for city snow. They get caught in some messy traffic, but are helped out by a man and woman. The childless couple is in the city for the holidays so they can enjoy watching all the kids celebrating since they can't have any of their own. The woman comments how she wishes she had a child like the freckled Paula Louise, and as they walk off the man drops his wallet. The kids try their best to return it, but can't catch him in time. Meanwhile, a trio of hoodlums see them with it and chase them.
When running from the gang, the kids jump into a random house and find it inhabited by a girl talking to herself and decorating a coat rack. The house is an orphanage and the poor child, Jenny, was left alone for Christmas. She's insistent that no one will adopt her because of her leg brace, but the kids sneak her out to force the man and woman into loving and hence adopting her. They are spotted by the pickpockets, chased into the park, held by their ankles, and shaken. The robbers get the wallet, but the police come by and arrest them, saving the day!
The man and woman are so happy that they not only adopt Jenny, but take Paula Louise with them too! The rest of the kids go home for Christmas, and the next day the man and woman send them all presents. Xavier, Colonel Casey, and the kids all have a happy Christmas!