During a bustling Thanksgiving Day parade in New York City, a man named Kris Kringle steps in to replace an intoxicated Santa Claus. Kris, embodying the spirit and mannerisms of the real Santa, quickly becomes a beloved figure at the department store Macy's. However, his claims of being the actual Santa Claus raise skepticism, especially from Doris Walker, a no-nonsense, pragmatic event director, and her young, precocious daughter, Susan. Doris has raised Susan to be skeptical of fairy tales, fostering a sense of realism that leaves little room for belief in Santa Claus.

As Kris continues to spread goodwill and cheer, he attracts the admiration of the public and the attention of legal authorities. His assertion of being the real Santa Claus lands him in a court case that questions his sanity and, more broadly, attempts to affirm the existence of Santa Claus. Aided by a determined lawyer named Fred Gailey, Kris's belief in the power of goodwill is pitted against a legal system grounded in evidence and fact. The trial's outcome hinges on whether belief, rather than empirical proof, can triumph, stirring emotions and challenging the characters' convictions as the city tunes in to see if Kris Kringle's Christmas spirit can indeed be embraced.