Plot
Duncan is a Christmas elf who is stationed in Santa Claus' headquarters at the North Pole. One day, he and Santa are alerted to an alarm from the Technical Integrated Naughty/Nice Santa List (T.I.N.N.S.L.) that identifies Lincoln Loud as a "Flipper", someone who flips between naughty and nice, as its final analysis cannot determine if he should be put on the naughty or nice list. Despite his insistence that he is not ready, Duncan is sent to Royal Woods to spy on Lincoln, who wishes for a Rip Hardcore multi-tool.
The Louds and Lincoln's best friend Clyde visit Gingerhausen, where Lincoln realizes that someone is spying on him. He and Clyde chase and catch Duncan - who Lincoln mistakes for an actual elf - who tells him that he is a "Flipper" due to a series of pranks and minor misdeeds he committed throughout the year. While being interrogated by the duo, Duncan adds more infractions to Lincoln's list that eventually pushes him down to the naughty list before escaping and returning to the North Pole.
Now on the naughty list, Lincoln attempts to hack into T.I.N.N.S.L. through a tablet that Duncan left behind. However, his plan backfires and he ends up accidentally reversing the entire world's naughty and nice lists. On Christmas Day, the other Louds get coal while Lincoln manages to get the multi-tool; they then find out that the actual naughty people's Christmas wishes has come true. With his family mad at him, Lincoln realizes his mistake and the potential consequences, and asks his family to travel to the North Pole on a mission to set things right. Meanwhile, the North Pole and Santa himself has turned "naughty".
Returning to Gingerhausen, the Louds follow Lily's map to a portal which takes them to the North Pole, where they are attacked by corrupted Christmas elves, reindeer, snowmen, holly bushes, nutcracker guards, and evil rabbits. Atfer reuniting with Duncan, the family sneak into Santa's headquarters and manage to swap back the lists, but are confronted by Naughty Santa. Lincoln tries to convince his family he is not naughty, but Santa shows the family footage of the ramifications that the swap has introduced. Lincoln only agrees to cooperate with Santa under the condition that his family is released, but Santa secretly has Gerald take them to the coal mines where Duncan is imprisoned.
Lincoln escapes Santa's office, frees his family from the coal mines, and finds out that the secret ingredient Lynn Sr. obtained earlier is actually a sample of Christmas magic. Lincoln passes some multi-tools to his family as Lincoln and Duncan head for the top of Mount Christmas to pour the vial, while the other Louds use the multi-tools to fight off Santa's minions. However, Naughty Santa soon emerges with a flying reindeer gingerbread cookie which turns anything hit by its beam into gingerbread cookies.
The Louds follow Santa, who is pursuing Lincoln and Duncan, on a sleigh. Lincoln jumps in front of Duncan as Santa fires a beam from his reindeer, taking the hit and turning himself into a gingerbread cookie, devastating his family. As Duncan mourns Lincoln for his selfless sacrifice, his tears generate enough genuine Christmas magic to restore the North Pole, globally turning everything back to normal. With the niceness restored and Lincoln revived, the Louds reconcile with him before they meet the restored Santa, who offers Lincoln to restart the day so the Louds can have the Christmas morning they deserved, to which he accepts.
Santa proceeds to restart the day, therefore erasing the events from everyone's memories except for Lincoln. While his siblings open their presents, Lincoln, ultimately earning his spot on the Nice List, receives a self-titled multi-tool as a reward for his good deed. Watching from the monitors, Santa Claus is proud with the turnout and Duncan's actions, as Duncan plans to continue work on T.I.N.N.S.L.
During the credits in the style of Christmas card drawings, the Loud family celebrates Christmas with Albert and Myrtle; Lincoln, Clyde, Howard McBride, and Harold McBride go sledding where they see Santa Claus; Lori delivers her Bobby ice sculpture to Bobby with the Casagrandes present; Lucy finally gets an autograph from Krampus; Gerald delivers towels to Santa's reindeer in their gym; Cheryl and Meryl having their Christmas feast; and Duncan oversees T.I.N.N.S.L.'s upgrades.
