When Reverend Lovejoy and Ned Flanders are unable to deliver the Christmas sermon, Homer steps in and tells the story of the birth of the baby Jesus (Bart), King Harod’s (Mr. Burns’) attempt to have the baby killed and the creation of the first Christmas tree.
Grandpa relates to Bart and Lisa the story of how in the Navy he and his older brother Cyrus were fighting in the Pacific in World War II. During a battle Cyrus’s plane is lost and Abe and Mr. Burns (his co-pilot) crash land their own plane. At Christmastime while awaiting rescue, Burns, anxious to shoot at something, shoots down Santa Claus. Abe and Burns help Santa to rebuild his sleigh (only for Burns to later steal.) After Abe gets it back, Santa promises to come back for a follow-up rescue, but never does. After Abe has finished relating the story to the kids, Santa makes his overdue appearance and takes Abe to Tahiti to be reunited with his brother.
The kids at Springfield Elementary perform “Perhaps the worst version ever” rendition of “The Nutcracker” ballet according to Superintendent Chalmers. When it is revealed that you don’t have to pay for the music rights it leads to a montage of citizens of Springfield going about their usual Christmas activities to the more familiar pieces of music from “The Nutcracker,” including a sequence where Moe tries to kill himself, and Homer (forgetting as usual) tries to get Marge her present at the last minute.