At the North Pole, Santa Claus (George Wendt) and his dog Santa Paws (Tom Bosley) take a look at the magical Christmas Icicle, which is melting because nobody believes in Christmas anymore; if it continues to melt, Christmas will be gone forever.
Santa Claus (Richard Riehle) receives a gift stuffed animal dog when his dear friend, Mr. Hucklebuckle who owned a toy store in New York City, passes away. To help cheer Santa up, they bring the stuffed dog to the magic icicle which turns it into a real puppy, whom Santa names Paws (Zachary Gordon) and tells him that they will be the best of friends for all eternity. Meanwhile, Mr. Hucklebuckle's grandson James and his wife Kate are gifted the toy store and are told by Mr. Stewart (Bill Cobbs) as long as they run it for a Christmas season with a profit then they can transfer a deed to have full ownership. James is a CPA from Los Angeles and plans to sell the store once they have ownership. Kate and James are unable to have children and are sad to face another Christmas without children of their own.
Mrs. Paws has just given birth to four adorable puppies named Hope, Jingle, Charity and Noble. Four months later, the Santa Pups each have their own personalities, Hope is always ready to take action wherever she goes but never takes caution, Jingle loves to sing but can only sing off-key, Charity still needs to learn how to share, and Noble pretends to be the leader of his sisters, and leads his sisters into trouble. Meanwhile, in school, Noble asks Eli and Eddy if they can their own magic crystals, but have to understand the True Meaning of Christmas to earn one. The Santa Pups are then taken on a field trip to the cave of the Great Christmas Icicle, where they learn how magic is used, and how the Christmas Magic in the icicle is used to power the magic crystals. When Mrs. Claus prepares to go to Pineville, Noble comes up with a plan of his own, his plan is to take Eddy's magic crystal collar, and then fly to Pineville to prove that they are ready for their own crystals. Once in Pineville, Noble begins granting the first Christmas wish to a girl named Taylor whom she wishes to skate really well, and then to another girl named Sally who wishes for her two front teeth, but after a furious young boy named Carter wishes for the Christmas spirit to disappear, Noble ends up granting a terrible Christmas wish that then affects all of the people in town. The Santa Pups then meet a new friend Baxter, who his owner Jeb Gibson, is actually a dog catcher, catches the Santa Pups and takes them to the pound. The Santa Pups then explain that if they don't get the crystal back and reverse the wish, Christmas could be in big trouble. The Santa Pups then try to retrieve the crystal with help from Hope, but Hope is not careful on the descent, and accidentally wakes up Brutus, and then explains that his life has been pretty rough due to his owner having lost the Christmas Spirit. The Santa Pups agree to get Santa to take him off the Naughty List. Mrs. Claus, Carter, Sarah, the pups,