Scott Calvin, now firmly established as Santa, faces new challenges as he prepares for another busy Christmas. He and his wife, Carol, who is expecting their first child, are hosting the in-laws for the holidays, aiming to keep the North Pole's true nature a secret from them. Meanwhile, the Council of Legendary Figures, including Mother Nature, Father Time, the Easter Bunny, Cupid, and the Tooth Fairy, convenes to discuss the arising disturbances caused by Jack Frost. Frost, feeling underappreciated and envious of Santa's popularity, hatches a plan to sabotage Christmas and take over the role of Santa Claus for himself. As Scott juggles his responsibilities and tries to maintain the illusion for his in-laws, he must also deal with managing and mediating the tensions among the legendary figures, all while keeping a wary eye on Frost's machinations.

Jack Frost's manipulations intensify, exploiting loopholes and bending the rules to further his agenda. He tricks Scott into invoking the "Escape Clause," a magical provision that could undo his tenure as Santa and rewrite history, letting Frost step in to claim the coveted position. As Scott grapples with the chaos Jack creates, he must find a balance between his duties as Santa, his role as a husband and soon-to-be father, and the need to counter Frost's schemes. Amidst the festive preparations and the legendary figures' squabbles, Scott's leadership and ingenuity are put to the test, compelling him to find a way to preserve the spirit of Christmas and safeguard the future of the holiday itself.