Puppy pulls a sled that has a Christmas tree and some Smurfs riding along on it to the Smurf Village, where most of the Smurfs are busy getting into the holiday spirit by stringing up decorations and putting ornaments on the tree while singing a Christmas variation of the Smurf song. Wild and Chitter peek out from behind a barrel and watch the Smurflings pass by him, eager to hang up some decorations. He is confused at first, but then decides to join in on the fun. Brainy has Wild string up some tinsel along the Smurf houses, but he ends up using the tinsel to swing around until he lands out of control into a snow-Smurf that Baby and Painter were working on. Nat asks Wild if he's in the village to help the Smurfs decorate while he rings a Christmas bell. Wild takes the Christmas bell and wears it on his head for a hat. Brainy tells Nat that Wild wouldn't know a bell from a bonnet as he takes the bell away from Wild. He then climbs up through the tree to meet Smurfette as she asks him the same question that Nat asked, but he suddenly slips back down and knocks down some ball ornaments, which makes Vanity get all upset.
Papa Smurf comes along to tell his little Smurfs that they shouldn't expect Wild to already know what Christmas is all about because this is his first Christmas. Smurfette then takes Wild by the hand to show him what Christmas is about: singing, dancing, and lots of presents, some of which Jokey is in the process of wrapping. Wild takes a bit of Christmas ribbon that Jokey is using and wraps Brainy up in it, all tied up and gagged with a pretty bow. Brainy is quite annoyed until Smurfette tells Wild that he is supposed to wrap presents, not Smurfs. Wild then unties the disgruntled Brainy. Greedy shows up with a tray of smurfberry candy canes that he eats one of while the rest get knocked off the tray by Clumsy and fall onto the branches of the Christmas tree. Papa Smurf then adds that there's a special spirit of giving and sharing that comes around the time of Christmas, and it's not just for Smurfs. He takes one of the wrapped gifts which he says is for Homnibus and tells his little Smurfs that when he returns, they can all share gifts with each other. Brainy asks why they couldn't open their presents now, and Papa Smurf answers that Grandpa Smurf and Sassette haven't yet returned, and that Grandpa Smurf is giving his gift to Sassette a little early.
At that moment, those two Smurfs are witnessing a Christmas celebration going on in a human village with minstrels playing, jugglers juggling, and marketers selling gifts and food. One of the apples that's being used for juggling falls to the ground near where Grandpa Smurf and Sassette are hiding as they observe all the activity. The young Smurfling is amazed by all the toys the humans get to play with, as she sees a marketer playing around with a puppet he has created. Sassette asks Grandpa Smurf if she could get a closer look, and Grandpa allows her to do so as long as she is careful not to let herself be seen. As they both cross the street, somebody has peered out of the alley he was in, also looking at all the Christmas activity but thinking about people's purses being full of gold. He sees a target nearby and goes into action, unaware that a young Smurfling is watching him pickpocket a rich customer. His victim then notices that his money is gone while the thief makes a run for it, but then Grandpa throws the apple at the thief, knocking the money bag out of his hand. The victim spots the thief as he disappears into the crowd without the money bag. Sassette hugs Grandpa Smurf, glad that he has stopped a theft, though Grandpa says he has wasted a pretty tasty apple.
The puppetmaker is frustrated that nobody is buying his toys and so packs up his gear and starts moving his wagon down the street. Just then a boy stops him, who is interested in the old man's puppets. He is pleased that the boy likes his toys and offers one of them to the boy as a gift. But then the boy's father calls out his name, Hans, scolding the young boy for consorting with poor people and throwing away the toy that was given to him, saying that he will buy his son finer toys than that. The puppetmaker watches sadly, as do Sassette and Grandpa Smurf, as the carriage that the boy and his father ride off in crushes his toy underneath its wheels.
Sassette and Grandpa Smurf follow the puppetmaker, who is referred to as Gustav, as he makes his way back home to meet with the doctor who is watching over his wife Elise. The doctor gives Gustav grave news, telling him that her spirit is very weak. He says it is possible that the Christmas holiday will brighten her mood, but the rest of his words trail off, indicating that this holiday may be her last. After the doctor leaves, Gustav shows his wife the puppet he has made for her. She smiles as the puppet reminds her of a Christmas long ago, with children laughing and people singing. But her smile fades when she realizes the condition she is in, and though Gustav tries to encourage her with tales of "Christmas elves" making wishes comes true, she says it will take more than that to make it a merry Christmas. As Gustav leaves his wife to rest, wishing he could find some way to brighten her spirits, Sassette asks Grandpa Smurf if there's something they can do to help the couple. Grandpa believes that they can, and soon they depart to find that way before Gustav notices that he had tiny watchers through his window.
Meanwhile, back in the village, Smurfette notices that Wild is standing underneath the mistletoe and gives him a kiss, which gives him that warm glowing feeling inside. Sassette and Grandpa Smurf arrive to get help from the other Smurfs, but they are too busy with Christmas preparations of their own to bother with other things. Fortunately, Wild comes along to offer whatever help he can, bringing along a sled pulled by Chitter so the two Smurfs can deliver their sacks of presents to the humans who need them more than their fellow Smurfs. Papa Smurf arrives a little later on to find out that Grandpa Smurf and Sassette have gone off to the human village to help a sick elderly couple. Brainy wonders why those two Smurfs would spend their Christmas doing that, and Papa Smurf reminds them of what Christmas is truly all about, and calls everyone out for being too catch up in their own holiday and ignoring those who can't help themselves. The Smurfs in the village realize how selfish and preoccupied they became with preparing for their own Christmas and soon turn to making preparations for the Christmas of an elderly couple that they intend to save. As for how to get all those things to the couple's house, they have Puppy pulling the sled, which starts to go off without Brainy joining them.
As for Grandpa, Sassette, and Wild, the journey gets tougher as they are now beset with a heavy blizzard which slows them down. They soon hear the ringing of a Christmas bell coming from behind them, which makes Sassette think it's Santa Claus...only for Puppy to show up licking their faces. Santa, who turns out to be Papa Smurf, tells the traveling Smurfs he thought they needed a little company this Christmas, and soon they are riding with the rest of the Smurfs on Puppy's sled, with Chitter licking Brainy's face as the squirrel rides in the back with Brainy and Wild.
That night, Elise calls her husband Gustav to bed as he puts out the fire in his hearth, hoping that tomorrow morning his wife will be stronger. After the lights dim in their house as well as in all others, the thief seen earlier comes out of hiding to ply his trade once again on the rich folks going home with their gold. The Smurfs arrive in the human village that they must pass through in order to get to the elderly couple's house. Papa Smurf has Puppy take them through an alleyway so that they wouldn't be seen. At the same time, however, Hans' father decides to take the alleyway as a shortcut home, carrying gifts for his son. The thief watches the father as he passes by, then sneaks up to him and grabs his bag of gold. The father, noticing that his bag is gone, calls out, "Stop, thief", which is heard by the Smurfs as they also are passing through. They knock over the father and his pile of gifts, one of which knocks Brainy and Hefty off the sled. Hefty spots the thief and gives chase after him while Brainy finds himself contending with a vicious rat. Hefty then comes to Brainy's rescue by tying the rat's tail to a hook and calling for his friend to jump down, getting out of the alleyway as the rat is kept from chasing after them.
The Smurfs reach the elderly couple's house only to find out that they have gone to bed, so Papa Smurf says they will leave them a Christmas present for morning. Soon the Smurfs are setting up their Christmas tree and their decorations inside the couple's house, with Painter painting pictures and Wild and Smurfette stringing up tinsel and wreaths on the rafters. Papa Smurf is so pleased with his little Smurfs' efforts that he tells them they should hurry home before the humans awake. However, Clumsy causes a little accident that makes some noise, waking up Gustav from his sleep to see "elves" running around inside his house. Elise doesn't believe him until he takes her out of the bedroom to see for herself. She is so amazed that these "elves" have gone through so much trouble even with hanging a star on a Christmas tree that she and Gustav couldn't believe it. Sassette says that he must believe, and so the Smurfs sing a song about Christmas being a time for sharing and caring. Elise feels her spirit getting stronger and says to Gustav that maybe Christmas wishes do come true.
Outside, Hefty and Brainy catch up to the thief and found his hideout. They sneak in and watch him count up the money he has stolen. Brainy asks Hefty what they are going to do now, and Hefty says he will think of something. Then they hear Grandpa Smurf singing the song from the elderly couple's house, which Brainy nearly blurts out before Hefty muffles him, but the thief is soon distracted by voices and goes to find out who's there. Brainy and Hefty try to make a run for it, but they bump into a barrel and cause more rattling which startles the thief even more. Then suddenly Hefty's shadow appears upon the wall, which makes the thief think he's being visited by an evil spirit. Hefty plays along with this idea, saying that he's not evil but the thief is. Brainy joins Hefty as his shadow is also cast upon the wall to further shame the thief for his evil acts upon people during Christmas. As the Smurfs' song to the elderly couple again plays, the thief begins to have second thoughts about what he's doing with the stolen gold.
Meanwhile, Hans' father brings guards with him to track down the thief and find that his money bag is now at the doorstep of Gustav the puppetmaker. Inside the house, Gustav gives Sassette one of his puppets as a gift to thank the Smurfs for the Christmas they have given him and Elise. But a door knock later, that Christmas almost comes to ruin as Hans' father sees the well-decorated house that he assumes came from the stolen gold and has Gustav arrested. Elise tries to come to her husband's defense by saying that it was elves that decorated her house, but neither Hans' father nor the guards believe her. Papa Smurf, who is now in hiding along with the other Smurfs, says they will have to show themselves in order to prove Gustav's innocence. Instead, the thief shows up and confesses that he was the one who stole the gold as he returns it to its rightful owner. As the guards apprehend the thief, the Smurfs leave the house in preparation for returning home to the Smurf Village. While Hans' mother keeps Elise company, wondering how she managed to decorate her house so well, Hans' father decides that he will not press charges against the thief since he got his gold back.
Upon their return to the village, Papa Smurf and Grandpa Smurf notice that Wild is having fun playing with Sassette's new toy puppet, with Papa Smurf saying that this will be one Christmas Wild will never forget. Brainy decides it is time to share his gifts to his fellow Smurfs, which happen to be a few dozen leftover copies of his Yuletide Quotations -- something that the other Smurfs respond to by pelting Brainy with snowballs.
- This is one of the few times in a Smurf-related production that Papa Smurf is referred to as Santa Claus due to the visual similarity between the two characters. The first time was in "The Smurfs Christmas Special" when Papa Smurf shows up to rescue William and Guinevere from a pack of wolves, while the third time is in the 2011 Smurfs movie where Patrick Winslow calls Papa Smurf "the little blue Santa man".
- This is one of the mainstream media Smurf stories that invoke the Exposed To The Elements trope mentioned on TV Tropes, as the Smurfs hardly wear anything heavier than a scarf to protect themselves from the wintry weather, not to mention, Nat and Wild being shown walking barefoot in the snow.
- During production, the voices for the Smurfs during the recordings of the songs are in normal pitch. But when the dialogue for the Smurfs was recorded for the special, it was pitched up to 2 semitones (making them sound slightly high pitched).
- This would be the last special run during The Smurfs cartoon series.
- The dark elements have been downplayed in this special and have little-to-no conflict. Compared to the previous specials, the plot is more light-hearted and focuses on a handful of random events through domestic situations. It even has a plot in similarities with "The Elves and the Shoemaker". Slapstick humor is slightly more evident in this special.
- A generic thief/villain appears in place of Gargamel, but he doesn't pursue the Smurfs and is unaware of their existence.
- Polygram Video released the special on VHS, along with two Christmas episodes, for the United Kingdom.
- Warner Home Video released the special on The Smurfs Holiday Celebration for North America.
- Fabulous Films released the special on The Smurfs: 'Tis The Season To Be Smurfy for the United Kingdom.
- Beyond Home Entertainment released the special on Smurfs: Specials Collection, The Smurfs: Complete Season 7 and 'Tis The Season To Be Smurfy DVD for Australia and New Zealand.
- Imavision released the special on Les Schtroumpfs Spécial Noël in French for Canada.