The story of Arthur Christmas revolves around Santa Claus, his wife, his two sons Arthur and Steve as well as their grandfather, Grandsanta. Set on Christmas Night, the film opens with a set of elves sitting behind their computers at the commando bridge of Santa’s gigantic modern ultra high tech sleigh. While Santa and the elves deliver presents to all the children using their high tech equipment, Santa’s oldest son Steve is managing the operation. In this moment Santa’s clumsy younger son Arthur, who works at the post station answering childrens letters addressed to Santa rushes into the room with a stack of papers causing chaos. Steve and a many of the elves are annoyed at Arthur for disturbing their operation and Steve convinces his brother to leave.
Later on, when their father is returning from his seventieth successful mission (he has now officially delivered presents for 70 years straight), he holds a small speech for the dozens of elves. Steve who long since wishes to become Santa is disappointed when his father tells everyone that he can’t await his next year as Santa Claus.
During the following family Christmas dinner Arthur suggests that everyone should play a Christmas board game. When the figures are distributed a fight erupts between Santa Claus, his son and his own father as they all want the figurine depicting Santa Claus. Santa, who is reluctant to pass on the position of Santa to his son wants to have the figure claiming that he is after all Santa Claus. Meanwhile Steve is tired of standing in his father’s shadow all the time and finally wants to succeed him as Santa Claus. However, his grandfather who is bored with sitting around all day and misses the old times, tells Steve he is no better than a mailman with a lot of gadgets. Grandsanta despises the modern world alongside its technology and feels that a real Santa Claus should deliver present with a sled made out of wood and pulled by reindeer. The various family members distraughtly leave the dinner table. While Grandsanta grumpily returns to his room, Arthur stops Steve and gives him a figurine of the Santa Claus saying that he is a great man and one day will be a great Santa Claus. However, Steve merely rejects Arthur saying that he should close the doors he left open while going after him because it is cold at the North Pole. At the same time Santa is overcome with doubt, asking his wife who he is if he is not Santa anymore while going to bed. His wife tells him that he is still her husband and that she will always love him.
While the family members settle their own issues, an elf from the giftwrapping battalion named Bryony who cleans up the floor finds a wrapped bicycle that has not been delivered yet. She immediately alerts Steve and his elf-assistant to the problem. Arthur who overhears them immediately panics and rushes into his room, and recognizes the present as being the gift for a little girl named Gwen, who has written him about her wish in a letter addressed to Santa. Arthur alerts his father Santa to the problem, who also doesn’t know how to handle the situation. Steve says that it is only one present and shows his father a computer graphic that indicates that one undelivered present only equals a minimal error and that otherwise their Christmas was perfect. Santa who does not know how to deal with this agrees although somewhat reluctantly with his son as there is nothing they can do because the sun is about to rise in two hours and their high tech sled has to be overhauled before he can go on an another ride.
Arthur, who is distraught that his father and brother seemingly do not care about the girl goes into his room. However, he is stopped by his grandfather who tells him there is a possibility and leads him into his old workshop. He shows him he still has his old sled, a 150 year old wooden model named Evie and the great-grandchildren of his old reindeer. Alongside his old battered reindeer friend, Grandsanta embarks on an adventurous journey with Arthur to deliver the present. Grandsanta uses his ancient world map, unfortunately the map is so old that it does not contain various newer cities such as Toronto and they get lost. To make matters worse various humans all over the world see them and mistake them for aliens, therefore causing national crises. Along the way they notice that Byrony has stowed away on their sled. Due to Grandsanta’s navigational errors the trio finally lands in Africa and are soon surrounded by wild hungry lions. However, Arthur manages to put them to sleep with his novelty Reindeer slippers that play a Christmas song. They manage to escape in the sleigh, but are now chased by the combined military forces of several countries who still think they are aliens.
Meanwhile Steve tries to contact Arthur and Grandsanta but as the old sled has no modern means of communication he can not reach them. The only possibility to communicate with them seems to be an ancient type of magically powered telegraph but this also fails. Finally, however, Steve is able to reach Arthur via Byrony’s Hoho, the North Pole version of an iPhone. Arthur asks Steve for help, but Steve tells him the whole world is hunting them believing they are aliens. However, Arthur is determined to deliver the present and they finally manage to find the way by using the GPS integrated in Byrony’s Hoho. They make it to their destination, even though they have lost several reindeers and the sled is badly battered. Arthur asks Grandsanta to deliver the present with him but he is reluctant to do so telling him it is pointless since the sleigh is broken. Arthur sadly realizes that Grandsanta didn’t come with him to deliver the present but mainly to prove to Steve that his old ways are better.
Arthur with Byrony in tow seeks to deliver the present. Arriving at the house he sees Christmas decorations in Spanish. He realizes they are at the wrong destination since Gwen lives in Cornwall. They have landed in Mexico in a town with the same name.
He tells Grandsanta and starts the sleigh. Steve contacts Arthur and tells him to come home, but Arthur says that their father would want them to deliver the present. However, Steve shows him a picture of their sleeping father. Arthur is distraught and wants to return home seeing that his father seemingly doesn’t care. At this, the sleigh loses more reindeer and they crash in Cuba.
Disappointed and with his spirits broken Arthur sits down alongside a fire with Byrony and Grandsanta. He tells them that he knows what they all think of him that he is a fool and always ruins everything. He feels as though there is no more Christmas spirit in Christmas. However, Grandsanta responds that he and his father were once exactly like him and that all that happened is that they grew older and with their age seemingly stopped caring about things that were once very important to them losing something of their spark of Christmas spirit.
Later on, when Bryony asks Arthur if she can burn Gwen’s letter, he says it doesn’t matter since there are a million letters exactly like this. However, once Arthur sees a picture Gwen has drawn of Santa he rescues the letter and says that the picture shows neither his brother, father nor grandfather but simply Santa. He responds that it does not matter who or how a present is delivered to a child; as long as it is delivered. He then seeks to use a fishing boat to row towards England and deliver the present himself. However, the others tell him he can never row across the entire ocean but Arthur comes up with a plan to use magic dust (Potash of Carboniloroxy Amilocitrate) and a grappling hook to get a hold of the sleigh. He flies up with the powder and manages to get the sleigh with the hook. After picking up the others they continue on their way. As they have lost all of their reindeer, Grandsantas old reindeer friend takes up the sleigh pulling it further.
Back at the North Pole, the elves meanwhile root for Arthur and also wake up Santa asking him if he really doesn’t care about a child and if children are just statistical data. Santa talks to his son Steve but he says it is impossible to deliver the present and that they have other problems since Arthur has embarked on a journey to deliver the present himself. With Steve refusing to help and not knowing what to do, Santa sneaks into the room of his son Arthur. There he finds the touching letters Arthur has written to children and realizes his son truly believes in the spirit of Christmas.
Wishing to help both his son and the little girl he goes on board the high tech sled and tries to go after them, however, he finds he can not operate it. He asks Steve for help but he refuses and a fight breaks out between the two. Steve responds that he has been planning all the operations for his father for years and that as a child his father also forgot to give him a present once. However, Santa’s wife breaks up the fight saying that Arthur and his grandfather are somewhere out there alone, and that they should think about them as their family is more important than the glory of being Santa.
Putting their differences aside they finally set out to find their family, however, due to Santa’s unfamiliarity with the technology they also end up in the Mexican town where Arthur and his grandfather arrived before. Steve berates his father for being just as incompetent as Arthur when it comes to handling these things.
At the same time Arthur and his grandfather still have trouble finding the way but they solve this problem by flying into space and looking down on the earth. This way they can locate their destination in England and finally head for Gwen’s hometown. However, the united militaristic forces of the world are already chasing them still believing them to be aliens. Grandsanta tells Arthur to deliver the present without him saying that he was right about pointing out that it doesn’t matter how the present is delivered as long as the children receive their gifts. Using an old toy sack as a parachute he and Bryony jump out of the sleigh. Grandsanta sacrifices his old sleigh and escapes with his old reindeer friend. While they both land in a garbage can, Bryony and Arthur ride on the bicycle towards the town and they manage to enter the house on time. At the same time Steve and Santa as well as Arthur’s grandfather enter the house trying to deliver the present. Upon seeing his father he quickly hugs him, before he, his brother Steve and his grandfather fight about who should deliver the present.
Arthur finally tells them to just deliver it before Gwen wakes up. He then begs his family to wait to see Gwen’s reaction. Upon seeing the girl’s happiness when receiving her bike and due to their adventures, they finally are able to settle their disputes. Santa as well as Steve and his grandfather learn that it doesn’t matter who is Santa Claus and delivers the present. Whereas Santa has realized that his time to go into retirement has come and that all things end one time, his son and father have realized that it doesn’t matter whether presents are delivered with the help of modern technology or the old fashioned way with a wooden sleigh and magical flying reindeers; having all learned that the most important thing is the spirit of Christmas, that the children receive their presents and that the children can believe in a Santa Claus who brings them gifts on Christmas Eve, whoever this Santa Claus may be. They also all realize that Arthur truly embodies the spirit of Christmas and Santa tells Steve that he is a great son who really was in charge of planning all the last Christmas “operations”, however, he also asks him if he really would be the best Santa Claus. Steve, realizing that he is very smart but lacks the Christmas spirit his brother possesses, takes out the figurine of Santa Arthur had given him earlier. He hands it over to Arthur saying that he is a Great Santa Claus while he is the brains in the background.
One year later, Santa has retired from his job and spends most of his time relaxing with his own father while spending the other time dancing Salsa with his wife, which both have discovered for them. Bryony is now the head of the gift wrapping battalion and Steve has been promoted to leader of Christmas operation, while Arthur is the new Santa Claus. The last scene shows Arthur flying the high tech sled now named Evie adorned with Christmas ornaments and pulled by hundreds of reindeers.