At the North Pole, Papa Elf recounts how a baby boy crawled into Santa Claus's sack at an orphanage one Christmas Eve and was unwittingly transported back to the North Pole. When discovered at the Santa's workshop, the elves name him Buddy because of his "Little Buddy" diaper, and Papa Elf adopts and raises him.
Santa narrates the story of Buddy's travels to New York City to meet his father. Along the way, his unrelenting cheer transforms the lives of everyone he meets and opens his father's eyes to the magic of the holiday.