The episode begins with Jerry, Elaine, and George at Tim Whatley's Hanukkah party, commenting on Whatley still being Jewish. Whatley thanks George for the Yankee tickets. Elaine notices a guy in a denim vest checking her out, and tells Jerry that her fake phone number's coming out tonight. Jerry introduces himself to an attractive woman. Elaine gives her fake number to "Denim Vest".
Jerry and George meet some time later in the coffee shop. George had brought his mail, and begins to open it. He notices he got something from Whatley, only to discover it's a card saying a donation had been made in his name to a children's charity. George is offended by this, and feels he should've gotten a better present. Elaine arrives, and tells the waitress "nothing for me", and tells Jerry she's going to Atomic Sub later. She has a card, which they stamp every time she buys a sub. She becomes a Submarine Captain at 24 stamps. George then reads a card, sighs, and proceeds to shove it back into the envelope. Moved by curiosity, Elaine snatches the card out of George's hand, and reads "Dear son, happy Festivus". She's confused as to what Festivus is, so Jerry explains that Frank made up his own holiday due to him hating all the commercial and religious aspects of Christmas. Jerry then mentions a "Feats of Strength" that always left George crying, at which he races out of the coffee shop, leaving Elaine and Jerry laughing.
In Jerry's apartment, Elaine moans that she lost her Atomic Sub card, and is sure she gave it to Denim Vest, along with her fake number. Jerry suggests she try her fake number and see if he's called it. Kramer's mobile phone then rings. He answers it, talks for a minute, then hangs up, puts on his coat, and proclaims that the strike's over and he's going back to work. Naturally, Elaine and Jerry are surprised at this. Kramer explains that H&H Bagels is now paying $5.35 an hour (as Elaine pointed out, "I believe that's the new minimum wage."), which was the demand of him and everyone else who had gone on strike there 12 years ago.
Kramer enters H&H Bagels, proudly proclaiming he's back. After a bit of reminding, the manager finally recognizes him. At first reluctant to take him back, the manager concedes "I could use someone for the holidays".
Elaine is at a horse betting place, whose number is her standard fake. She is talking to a pair of unattractive bookies who seem to like her. Elaine rethinks giving them her real number (for them to give to Denim Vest when he calls), and instead gives them the number for H&H Bagels, seeing Kramer's business card in her purse.
Jerry meets up with Whatley in a classy restaurant, and tells him he's going out with a girl he met at his party. Gwen (Jerry's girlfriend) walks in. The poor lighting makes her look extremely unattractive. Whatley almost looks sympathetic.
The next day, Jerry and George are discussing this, and diagnose Gwen as a "Two-Face". George then shows Jerry what he's giving out as a present at the office- fake donation cards for the "Human Fund". Kramer comes in, and gives them a sack of bagels. They bite in, and Kramer mentions that they're day-olds. George spits his out and gets going. Jerry says to him "Happy Festivus!" Elaine comes in, and says the same thing. George states that it's a stupid holiday his father invented, and walks out. Kramer is impressed by Frank inventing a holiday. Elaine tells Kramer to take a message for her if a guy looking for her calls H&H.
At H&H, Frank Costanza meets up with Kramer, states he hasn't celebrated Festivus in years, and after Kramer asks him to tell him everything, explains the origin of Festivus, how it came out of a struggle Frank had over another guy over the last doll in the store. Meanwhile, George is at Kruger Industrial Smoothing, handing out his fake presents. Nobody seems impressed with them. Frank then tells Kramer that "at the Festivus dinner, you gather your family around, and you tell them all the ways they have disappointed you over the past year". Kramer asks if there's a tree. Frank says instead there's a pole. "Requires no decoration. I find tinsel distracting." Kramer shows approval, and Frank agrees to bring it back. Kramer then asks Harry (the manager) for the 23rd off for Festivus. When he can't get off, he goes back on strike.
Jerry picks up Gwen in a cab. She looks attractive. They then enter a tunnel, and she's unattractive. At the coffee shop, Jerry and George discuss this. Jerry decides that now all his dates with her will be in the coffee shop's back booth, the one place she always looks good. At that moment, Frank and Kramer come in. Frank is dragging an aluminum pole across the floor. Kramer invites everyone to Frank's for Festivus. Frank then plays a cassette tape, recorded during one of their Festivus celebrations. Again, at the mention of Feats of Strength, George races out of the coffee shop in a mad panic. Gwen then comes in, unattractive-looking. Jerry introduces her to Frank and Kramer, and then escorts her to the back booth, where she now looks pretty.
Kramer is picketing outside of H&H, and calls Elaine inside from a pay phone, and warns her that he sabotaged the bagel machine. Sure enough, a steam valve breaks, but nobody seems to care, much to Kramer's disappointment.
At Kruger's, Mr. Kruger gives George a check for $20,000 for the Human Fund.
Jerry and Gwen are at the back booth again. Gwen complains she just found a rubber band in her soup. George arrives, and Gwen leaves. George shows Jerry the check for twenty grand. Jerry tells him to give it back, but George says he's considering starting his own charity.
Kramer continues to picket outside H&H. Elaine finally gets her call from Denim Vest, and leaves the building. The steam, however, has distorted her makeup and hair, and she looks very ugly. She leaves, and Gwen arrives, looking good. Kramer of course doesn't connect her with the ugly woman Jerry was with at the coffee shop, and says she's much prettier than Jerry's actual girlfriend. Gwen then thinks that they're always in the coffee shop because he's afraid of getting caught.
Elaine meets up with Denim Vest. Shocked by her ugliness, Denim Vest says the card's at his place, and gives Elaine a fake number, which he only copied off a nearby moving van.
Kruger calls George into his office, and tells him that apparently the Human Fund doesn't exist. George hands him back the check, but Kruger's more upset about getting a fake gift (the donation card). George thinks quickly, and explains that he actually celebrates Festivus, and feared persecution. Kruger doesn't believe this, and George unwillingly sets out to prove it.
At the Costanza household, Frank is surprised to see George, who introduces him to Kruger. Frank goes to show Kruger the pole. Jerry and Elaine arrive. Elaine hadn't time to go home, and thus still looks ugly. Kramer arrives, along with the two bookies. They say they were calling to ask her out, and got H&H, where Kramer said he was about to see her. "It's a Festivus miracle!" They sit down to dinner, and Frank begins with the Airing of Grievances. He says to Kruger "My son tells me your company STINKS!". George is less than happy about this. Frank continues to berate Kruger, and then loses his train of thought. Gwen arrives, and accuses Jerry of cheating on her, thinking Elaine is the "Ugly girl I've been hearing about". Gwen storms out. Jerry follows her, but immediately returns to his seat, muttering "Bad lighting on the porch". Frank then announces the Feats of Strength, but this year, gives the honor to Kramer. Kramer then apologizes, and says he has to work a double shift at H&H- no longer on strike. He caved- he had to use their bathroom. Kruger, evidentially still upset from the Airing of Grievances, volunteers George. It is then revealed that the Feats of Strength George always fears and hates is a wrestling match with his dad. "Until you pin me, George, Festivus is not over." George gives in about a second into the match.
The episode ends at H&H. Kramer is working with bagel dough, and his chewing gum falls in. The manager sees Kramer extracting the gum from the dough, and fires him on the spot.