The Tennysons drive in the scorching sun of Death Valley, California. Inside the RV, Gwen and Ben complain about the heat, and the air conditioner is already at its max. Ben decides to transform to Grey Matter to tweak with the A/C. Grey Matter's tinkering seemed to have busted it, causing them to stop in the middle of nowhere. Outside, they spot a mysterious doorway, and they decide to check it out.
It had mysterious giant toy soldiers in the sides of the entrance. Upon opening it, they find themselves in a Christmas-themed town, and the snow finally relieved them from the scorching sun. They decide to stay in for awhile, but little did they know that someone is watching them, and it seems that the man is specifically looking after Grandpa Max.
Ben and Gwen enjoy themselves in the snow, and they have a snowball fight. They throw a ball at Grandpa Max. He scares them for a moment, and then he says that they are messing with a pro.
Gwen speculates at how the town keeps up with its special decorations and effects, seeing that there are reindeer, elves, and giant toy soldiers. The theme makes them realize that they haven't celebrated Christmas together as a family in a long while. Ben and Gwen head off to do what they want.
Ben slides down a bobsled; Gwen goes ice-skiing, while Grandpa Max goes inside for some cocoa. A doll nearby turns its head, and the same man speculates him as Santa Claus. As Max heads outside, a group of elves tell him that he should coming along with them. Max questions them about the cocoa he's gotten. One elf in the alley seems to be on a lookout.
Grandpa Max enters a giant mansion, and up at the balcony, a man addresses himself as Mr. Jingles. He says that he is happy to finally meet Santa Claus himself. Max tells him that he must be confused for someone else, but Mr. Jingles tells him that he created the holiday village. Elves come with giant red ribbons and wrap it around him. In a magical effect, Grandpa Max's appearance is transformed into Santa Claus himself. Mr. Jingles activates a button, causing him to sit down in the chair. Mr. Jingles then uses a joystick to control his bodily movements.
Outside, Ben and Gwen enjoy themselves, and eat from a giant gingerbread man. Gwen insists that they should tell Grandpa Max about the fun they are having so far. Ben seems to be okay without telling him. Back at the mansion, Grandpa Max struggles to get out of Mr. Jingles' clutches. He tells him that he has a workshop, and he opens it up. Mr. Jingles announces to the elves down below that Santa himself has arrived, and he uses the joystick to let Grandpa Max wave back at them. Outside, Ben and Gwen find presents under a giant Christmas tree. But before they can open them up, giant nutcrackers walk toward them, and it looks like they are ready to go after both of them.
The guards come closer to them, while an elf throws ornaments to distract them. They run off, and hide behind a sled. Ben activates the Omnitrix, hoping to transform into Heatblast. Unfortunately, it changed him into XLR8, and he has to go with what he has. XLR8 runs off into the frozen ice, but he realizes that it's a lot harder to accelerate in it. He struggles to hang on, but more toy soldiers come toward them. XLR8 was able to pass by them, but he crashes onto a rail and he ends up head first into the snow. A smaller toy soldier shoots candy canes straight at them. XLR8 and Gwen try to get in distance, and XLR8 takes a pack of snowballs. He spins with great speed, and the snowballs fly, hitting each and every one of the nutcrackers that were after them. The nutcrackers roll down the hill. As XLR8 continues to spin around, the Omnitrix deactivates, causing Ben to spin into the snow. Gwen praises him for having a good idea.
The same elf comes in and praises for their tactics in battle, but he warns them that they are under the control of Mr. Jingles. Soon enough, Ben and Gwen are given the facial features of an elf. At the workshop, Grandpa Max continues to struggle out of the chair. Mr. Jingles takes out a giant feather and tickles his nose. This caused Grandpa Max to laugh the Santa Claus laugh, and this made the elves below cheer with joy.
The day turned to night, and Ben, Gwen, and the little elf try to run away from snow monsters. They head inside the mansion, and look at a series of pictures. The elf points out that his picture was taken only a few days ago, in the year 1932. The monsters come in, but the elf opens a trap door in time to lead them into a room full of presents.
The elf tells them to destroy the "Jinglelator," a machine that makes everything magical. They see that the place is heavily guarded, but it seems that Gwen has an idea. The elf and Gwen ride on top of Wildmutt with antlers on, trying to act just like the reindeer. At first the nutcracker found that something looks fishy, but Gwen says that it's from Europe. Unfortunately, their cover was blown by one of the reindeer, and they go aboard a toy train to get away. They were able to get the soldier off the train, but they were shot off the train by the Jack in the Box. The three fall down into their doom.
They fall down into the main work room, and mounds of presents seem to have broken their fall. The Omnitrix deactivates, and Mr. Jingles finds them. He addresses the elf by the name Elsgood, and he is glad for directing his new elves into the workshop. Mr. Jingles immediately puts them to work.
Ben assembles a doll and it spits up on him. Mr. Jingles on the other hand is too obsessed with everything perfect. Elsgood points out the Jinglelator, which appears to be a colorful, giant piece of machinery. Ben wishes for Fourarms, but it transforms him into Grey Matter instead. He runs down the assembly line, while stuffed animals try to go after him.
Inside the Jinglelator, Grey Matter goes through a series of obstacles. In the endpoint, he observes the power source at the moment, and then he pushes a button to deactivate it. The Jinglelator caused a feedback which removed the magic, and all the toys stopped moving on their own. The Jinglelator exploded with different colors and effects, ending Mr. Jingles' control.
Mr. Jingles is devastated in what has happened, because he thinks that Christmas is ruined. Gwen explains to him that Christmas is not all about the best toy; it's about love and family. Still, he wants to find a way to deliver all the goods. Ben decides to take the job as reindeer. Stinkfly, Gwen, and Grandpa Max fly all over the world, delivering presents in the summer. They arrive back at the town, and everything went back to normal.
Ben makes sure that the curse is lifted, and he knocks on the nutcracker. Then they meet up with an old man named Elsgood with what appears to be his grandchildren. Ben and Gwen realized that it was the same elf. They wonder what happened to Mr. Jingles, but they find his statue, and a slate saying that Thomas Jingles founded the holiday village in 1928. At the RV, Ben and Gwen sit down in the back, and they continue on with their summer. They all realize that spending Christmas together as a family is important.