In a town called Sombertown, ruled by the ill-tempered Burgermeister Meisterburger, toys are strictly forbidden. A baby orphan arrives on the doorstep of the Burgermeister, who cold-heartedly orders him to be taken away. The winds of fate, however, carry the baby to the doorstep of the Kringle family, a group of toymakers who adopt him and name him Kris. Under the Kringles' care, Kris grows up with a love for making toys and a generous heart. When he reaches young adulthood, he decides to deliver toys to the children of Sombertown, believing that every child has the right to play and be happy.

Kris faces many obstacles, including the Burgermeister's laws against toys. On his ventures, he befriends a variety of characters including an intrepid penguin named Topper, a schoolteacher named Miss Jessica, and the Winter Warlock, a fearsome wizard who has the power to stop him. Kris brings warmth and joy to the cold village, but must elude the Burgermeister's forces at every turn. His efforts soon make him a wanted man, forcing him to creatively deliver toys in secret and changing the way he appears to the people, eventually growing a beard to disguise himself. His acts of defiance against the Mayor and his growing relationship with Miss Jessica take him down a path that will alter his life and legend forever.