In ancient times, a man named Claus (David Huddleston), who delivers toys in his small village, fulfills his destiny to become Santa Claus after meeting an expert toy-making elf, Patch (Dudley Moore), in the North Pole. In the present day, Santa Claus has become overwhelmed by his workload, and the disgruntled Patch flees the workshop to New York City. There, Patch unknowingly threatens the fate of Christmas by taking a job at a failing toy company run by a scheming businessman (John Lithgow).