It is Christmas Eve, and all the citizens of Elmore are in a festive mood. Many characters wish the viewers a merry Christmas, including the Wattersons, who are driving home in their car. Their high spirits are abruptly brought down, however, when they crash into someone. This "someone" turns out to be a filthy bum that looks strikingly similar to Santa Claus, at least in Richard's opinion.
They rush the stranger to the hospital, with Richard voicing his worry about being on the naughty list this year. He decides to make up for by running around the hospital doing several of what he considers good deeds, but are really him making a huge mess. Richard, being completely unqualified for even the simplest first aid procedures, causes much more harm than good. After blowing up Marvin, the doctor finally gives Richard his diagnosis of the situation: the bum is obviously not Santa, has no ID, has lost his memories, and must be taken care of by the man who ran him over. Nicole fiercely objects to having a filthy homeless man in her house on Christmas Eve, but the kids, who believe this man to be Santa, beg their mother to reconsider. She relents, and allows the stranger to come home with her.
Back at the house, Richard ushers Santa in, attempting to make up for running him over. Nicole follows Santa closely, sweeping the trail of grime he leaves behind and covering the chair before he sits down. At the same time, Richard surrenders everything he owns to Santa, giving him his house, his children, and even his wife. At the mention of the latter, Nicole tells her husband to go somewhere else for a while. She then rushes to the bathroom to start a bath for the bum, telling the kids to burn anything he touched with his filthy hands. The kids, still believing this to be the real Santa, try to help him to get his memories back.
They take him to a mall. Anais kicks the fake Santa (Larry) off his chair, and puts the man in his place. The kids figure that this would be a familiar surrounding and would help get his memories back. Anais asks for several extravagant things. The man calls her spoiled, causing her to storm out and start hitting stuff. Darwin asks for world peace, but the man replies that such a thing would be impractical. That makes Darwin very angry, causing him to join Anais in smashing stuff. Gumball asks if he can sit on the man's lap, to which Santa curtly denies, causing Gumball to join the other two. Finally, the man asks for a cookie, and is loudly denied his request by the other three. Now all four of them are ravaging the mall.
The scene cuts to the four of them in the Wattersons' car, angrily avoiding each other's gaze while Nicole drives home. Gumball breaks the silence by trying to bring the group together again. Everyone starts apologizing, and then they hug. Nicole is annoyed by this; she scolds the kids for apologizing to the homeless man instead of apologizing for causing thousands of dollars worth of damage at the mall. She sighs, wishing for a normal family with a normal husband that did not run around like a maniac for the sake of a fat, fictional man. As she drives away, Richard runs out into the street and attempts to wash the next car to pass. The driver, who turns out to be Principal Brown, stops abruptly, and the tree that was tied to the roof of his car flies off. It hits Rosie's reindeer decoration and erupts into flames, causing her to cry. Richard wishes her a merry Christmas.
Later on, the three kids try to push the bum up the chimney. Nicole then decides to tell her kids the truth. She drains out their Christmas spirit as soon as she tells the truth about Santa. She tells them the story about when she was a little girl and always sent Santa a letter for only one thing she wanted, but over time she kept sending letters and never got her gift and just stopped believing. When she finishes, she turns around and sees that Anais, Darwin, Gumball and Santa are gone. She goes outside and yells that she is sorry. The Watterson kids sing a sad song about Christmas being cancelled.
Meanwhile, Richard is in a neighborhood putting graffiti on a fence and pretending to find it and clean it up, but a police light and siren go off, scaring him. He jumps the fence and finds Santa's sleigh and a reindeer. He believes he can save Christmas and gets on the sleigh, trying to make the reindeer fly. When it does not, Richard smacks its butt and it shoots off. Below the sleigh, the homeless man, Gumball, Darwin, and Anais stop in front of the Wattersons' house and Gumball asks if the man wanted to come in for a cookie. He declines, thinking he had already been too much of a burden. As he is thanking the kids for believing him to be someone special, he is knocked out by a present. The kids look up at their dad, but look back at the homeless man when they realize he was actually Santa.
Santa asks them if it was still Christmas Eve, and when Gumball tells him it was, Santa thinks it was not too late as long as he had his sleigh. At that moment, the sleigh comes down and nearly hits him, but he, Darwin, and Anais duck. Gumball does not, however, and gets stuck to the bottom of the sleigh. Nicole is in the park looking for her kids to apologize when she sees the sleigh. She quickly runs after it. Richard pulls him to the top of the sleigh. Santa tells them to asks the sack for walkie-talkies so he could tell them how to land. After a little trouble, they get the walkie-talkies and throw one to Santa, who tells them to fly with their guts. The two nearly crash, so Santa tells them to asks for some parachutes and jump, but Richard and Gumball refuse because of what that would mean for Christmas.
Anais and Darwin begin collecting Christmas lights. Anais tells Richard and Gumball not to worry and tries to plug up them up, but they are too short. Nicole takes the plugs and forces them together, causing Richard and Gumball to see a runway for the sleigh to land. They are excited, but the lights flicker off and they panic. Nicole tells them not to worry because they were Christmas lights. The lights begin flickering on and off. The sleigh lands and Santa praises Blitzer. He then tells Nicole that he been looking for her and explains the situation: that all of the letters she had sent had been addressed to the South Pole as opposed to the North Pole where he lived. He had been in the neighborhood making sure he had her correct address when they ran him over. Richard apologizes, but Santa tells him not to worry because he would be on the nice list forever for the landing. Richard is pleased and tells Santa he owed him $800 for the hospital bill. Santa ignores him and gives Nicole her present: small plush toys similar to her family.
Santa thanks the kids for believing in him and begins to leave, but Richard stops him and smacks Blitzer's behind again. Some families leave their homes because of the noise and Gumball tells them that Christmas is back on, and they cheer, ending the episode.
[The episode begins by showing various Elmore citizens in the street celebrating Christmas. Hector is spraying a large aerosol can over a large house, making fake snow. Banana Joe and Penny both walk across the screen separately, both saying 'Merry Christmas!' to the camera. Tobias and Idaho are shown saying 'Go! Go!' to Masami, who is making small amounts of snow. Ms. Simian is shown holding a grocery bag, when suddenly, a roast chicken flies out. Carrie's head pops out of the possessed flying chicken. Carrie laughs and says 'Merry Christmas!' before being chased away by Ms Simian. The camera then shows the Wattersons driving along in their car]
Singers: It's Christmas Eve!
Singer: It's the second best day of the year.
When the air is fizzin' full of Christmas cheer.
Only one more sleep until Santa's here.
The Wattersons: Merry Christmas, everybody!
Singers: It's the second best day of-
[Richard drives into a homeless man, knocking him over. The Wattersons are all shocked]
Richard: I ran over Santa on Christmas Eve! I'm definitely on the naughty list now! Wait! Good deeds cancel bad ones.
[He opens a closed curtain]
Richard: Come on! Push!
[Richard closes the curtain, walks away, and jumps on a sleeping man]
Richard: I'll save you!
[Richard attempts to give the man mouth-to-mouth]
Doctor: I'm a doctor! [shoves Richard off of him] I'm on a break!
[Richard then uses a knee hammer to hit Felicity's knee. Her shoe flies off and hits Marvin's machine, causing him to bloat up before popping. Richard watches sheepishly]
Doctor: [taps on Richard's shoulder] I can assure you, sir, that this homeless man is not Santa Claus. But he is concussed, has no memory, no ID, and now he's your problem.
Nicole: What?! We're not keeping an unwashed stranger in my house on Christmas Eve!
[Nicole turns to see Gumball, Darwin, and Anais with sad faces]
Nicole: [Sighs] Fine.
The Watterson Home
Nicole: So where is your home, sir?
[Richard is bowing down in front of the homeless man while Nicole follows behind the homeless man, cleaning up the mess he is making on the floor]
Homeless man: I can't remember.
[Richard pulls out a chair for the man and Nicole cringes, throwing a newspaper on the seat before he sits down]
[Nicole sets down a plate of cookies on the table]
Homeless man: Your wife's cookies look delicious.
Richard: She's yours!
Nicole: [Through clenched teeth] Richard! Aren't there some good deeds to do somewhere else?
Richard: Yes! Gotta get back on the nice list!
[Richard runs out of the house]
Nicole: Okay, I'm gonna run a bath for our guest. [Quietly, to Gumball, Darwin, and Anais] If he touches anything, clean it...with fire!
[Nicole leaves, glaring at the man]
Gumball: Okay, come on, Santa! We gotta get your memory back! Now finish this sentence: "Ho, ho, ho, merry Chrrrr..."
Homeless man: "Creepy kids looking at me funny"?
[The Homeless man picks up a cookie and tries to eat it, but Anais snatches it away]
Anais: Oh, you can have your cookie...when the fate of Christmas is no longer at stake!
Anais: Okay, we need some familiar surroundings to get your Santa instincts to kick back in.
[They arrive at a small cabin with a sign calling it "Santa's Grotto"]
Anais: Wait here.
[Anais goes into the cabin]
Larry: Ho, ho, ho! Hello, little - ah!
[Anais kicks him out of the cabin]
Gumball: Okay, ask her what she wants for Christmas.
Homeless man: What do you want?
[Anais frowns sadly]
Gumball: Come on, Santa, put some Christmas into it!
Homeless man: [Sighs] Ho, ho, ho. What do you want, little girl?
Anais: I want four ponies! One for the bedroom, one downstairs, one for the bathroom, and a spare one no one else is allowed to use. And I want a princess tiara and a prince to marry me when I'm old enough so I never have to work like Mom.
Homeless man: Well, I don't think it's right to give kids whatever they want or they end up spoiled brats, like this one.
[Outside the cabin, Anais kicks down a snowman prop while screaming]
Homeless man: See? This is the problem with kids these days.
Darwin: I know. All I want for Christmas is world peace.
Homeless man: Well, that's nothing practical.
[Outside the cabin, Darwin uses a candy cane prop to hit another candy cane prop while Anais attempts to knock down the "Santa's Grotto" sign]
Gumball: Can I go on your lap now?
Homeless man: Nope.
[Outside the cabin, Gumball is on the roof, ripping up the fake snow. The homeless man exits the cabin]
Homeless man: So, can I have my cookie now?
Gumball, Darwin, and Anais: No!
[The homeless man angrily hits the cabin with the "Santa's Grotto" sign]
Leaving Elmore Shopping
[The homeless man, Gumball, Darwin, and Anais are in the backseat of the Wattersons' car, all angrily looking down.]
Gumball: I think we all started on the wrong foot here.
[The homeless man, Darwin, and Anais all begin talking at once]
Gumball: Guys, guys, guys, guys, guys. Let's just hug it out.
[They hug and Nicole suddenly stops the car]
Nicole: Don't you think instead of hugging a filthy stranger, you should be apologizing for causing thousands of dollars of damage at the mall?
Gumball: We're just trying to help Santa.
Nicole: For the last time: he's not Santa! Oh, I wish we were a normal family sometimes. Then my husband could talk some sense into you instead of running around the neighborhood like a maniac.
[Nicole begins driving again and Richard runs up behind them, in front of another car]
Richard: Christmas good deeds! Free windshield wash!
[The car swerves to avoid crashing into Richard and hits a parked car. The tree from the top of the car flies off and into a reindeer decoration, causing it to catch on fire. Rosie, who was watching the display, begins to cry]
Richard: Merry Christmas!
[Richard runs off]
Back at the Watterson home
[Darwin tries to shove the homeless man up the chimney]
Darwin: Come on, Santa. You need to go up as well as down. [To Gumball and Anais] I don't think he's gonna make it.
Gumball: He just needs some encouragement. Anais, get me the matches.
[The homeless man hears Gumball and begins to panic. Nicole walks over]
Nicole: Kids, I think we need to have a little conversation.
[In the living room, the homeless man, Gumball, Darwin, and Anais are on the couch while Nicole is standing in front of them, facing the other direction]
Nicole: Let me tell you something about Santa Claus. There is no Santa Claus!
[Gumball, Darwin, and Anais gasp, colorful lights leaving their heads]
Gumball: I think all the innocence just left my body.
Nicole: When I was a little girl, there was only one thing I ever wanted, so every year I wrote a letter to Santa asking for the same present. I hoped and hoped and hoped again. But he never came, and that's how I learned the terrible truth. Santa Claus doesn't exi—
[Nicole turns to face the empty couch]
[She goes outside]
Nicole: Kids? Oh, kids, come back. I'm sorry!
Christmas is Cancelled
[The setting is black and white and at night. Gumball breaks free of a snow globe he was trapped in, then unplugs the Christmas lights of a house, disappointing those who were looking at it. Darwin throws away a turkey Mrs. Robinson was trying to cut while Mr. Robinson look on. They walk off sadly. Anais draws a tear on a reindeer prop. Gumball, Darwin, and Anais pop out of the gifts belonging to Carmen, Leslie, and Tobias. The homeless man chops down a tree.]
Silence, the ringing
Turn off all the lights
Stop all the singing
No dinner tonight
Come shed a tear for wishes unanswered
Give back your gifts, for Christmas is cancelled
Chop down the tree, for Christmas is cancelled
[Richard spray paints the words "rap music" on a white fence]
Richard: Oh, no! Some rebellious young person defaced this pretty fence. It's lucky I'm here to fix it!
[Richard begins spraying over it with white, but a police siren and lights stop him]
[He jumps over the fence and a reindeer sniffs him. He and the reindeer begin screaming]
Richard: Huh? Yes! Santa's sleigh!
[Richard gets in the sleigh]
Richard: I'm totally gonna save Christmas. Go! Giddy-up! Activate!
[The reindeer does not respond to any of it, so Richard slaps it from behind, causing it to take off. Below them, the homeless man, Gumball, Darwin and Anais stop in front of the Wattersons' house]
Gumball: So, wanna come in for a cookie?
Homeless man: Oh, no, no, no, no, no. I've been enough of a burden and a disappointment. I'll be on my way now. But thank you for believing I was someone special. For a moment there, I almost thought that I could be Santa.
[A present knocks the homeless man out and Gumball catches it. They look up to see Richard on the sleigh]
Gumball, Darwin, Anais: Dad?
Homeless man: Ho, ho, ho!
[Gumball, Darwin, and Anais turn to where homeless man once stood, now with Santa in his place]
Gumball, Darwin, Anais: Santa!
Santa: That's right! How long have I been out? Is it still Christmas Eve?
Gumball: Yeah, but -
Santa: Then it's not too late! All I need is my sleigh!
[His sleigh comes flying at him; he, Darwin, and Anais duck, but Gumball gets stuck to the bottom of it, Meanwhile, Nicole is at the park]
Nicole: Come on, kids, come home! There's plenty of stuff that doesn't exist! The tooth fairy, Bigfoot, Switzerland...
[Santa's sleigh flies by and she runs after it when she spots it. Gumball is still stuck to the bottom of the sleigh and nearly gets hit by a weather-vane, but it only rips off some of his pants]
Gumball: [Screams] Oh, wait. I'm okay.
[Richard pulls Gumball into the sleigh next to him]
Richard: How do you land this thing?!
Santa: First you need to fasten your seat-belt!
[Gumball fastens his seat-belt, but Richard has trouble with his]
Richard: What the? How can I be fatter than Santa?
Gumball: [Points a utility pole] Duck!
Santa: Ask the magic sack for some walkie-talkies and I'll tell you how to land!
Gumball: [To the bag] I want some walkie-talkies!
[A present comes out]
Gumball: Aw, man! It's really well wrapped!
Richard: Ask it for scissors!
Gumball: I want some scissors!
[Wrapped scissors come out of the bag]
Gumball: Are you kidding me?!
Richard: Give me that, son! I'll show you how a real man opens his present!
[Richard puts the box in his mouth and the scene cuts to Santa catching a walkie-talkie]
Santa: Good job, chaps! Now, in front of you there should be an altimeter, a gyroscope, and an anemometer!
Gumball: Okay, what are they for?
Santa: I don't know. I never used them myself. But at least you're facing the right way! Now just fly with your guts! What can you see?