Plot
In the Middle Ages, the young boy Fred Claus eventually gets a younger brother named Nick. He grows up in the shadow of the younger, due to Nick's selfless and kind attitude which constantly wins the approval of their family over Fred. Their strained relationship is permanently damaged when Nick cuts down a tree, inadvertently destroying the bird house in which Fred's bird Chirp Chirp lived. Due to Nick's generous and helpful personality, he is deemed a Saint, and the family is gifted with immortality.
In the present, Saint Nick has become the modern-day Santa Claus, delivering gifts to the children of the world, while Fred has become a Chicago repossession agent. He lives alone and is friends with orphan Samuel "Slam" Gibbons. In an attempt to raise seed money to open an illegal casino plan, Fred is arrested for collecting donations, similar to a Salvation Army employee, but has no permit. His girlfriend Wanda then breaks up with him, as he unintentionally stood her up for her birthday dinner.
Fred asks Nick for bail and the seed money. He only agrees on the condition that he comes to the North Pole to work for the money. Just before leaving, Slam asks Fred to pretend to be his father but ends up being taken away and sent to an orphanage.
Head Elf Willie escorts Fred to the North Pole. Nick gives him the task of assigning children as naughty or nice based on their behavior. Efficiency expert Clyde Northcutt, from an agency which monitors the activities of supernatural entities, arrives to analyze the North Pole's dwindling performance on a three-strike assessment.
Fred picks a fight with the workshop's DJ Donnie after he plays "Here Comes Santa Claus" non-stop. The disruption causes a disruption that leads to Northcutt assigning the North Pole their first strike. Nick sandbags Fred into having dinner that evening with their parents.
Later that night, Northcutt shreds the children's letters. Fred is falsely blamed for "losing" them, and the lack of backup copies leads to a second strike. Not believing Fred's denials, Nick has security abduct Fred, and brings him to an intervention, attended by their parents, Nick's wife Annette, Wanda, and a psychologist. Angered by Fred's self-centeredness and his obnoxious attitude, Wanda leaves.
Fred grows upset by Wanda's departure from the intervention, so insults Nick and lambasts his parents for their favoritism. Following the intervention, Northcutt messes with Fred’s head, causing further resentment of Nick. Later, Fred sees Slam at the top of the Naughty List, then sees that Slam’s bad behavior is due to being bullied at the orphanage. He assigns every naughty child as nice.
The brothers get into a fight over Fred's decision, which leads to Nick injuring his back, afterward Fred bitterly tells Nick he wishes he was never born. Unable to now produce enough gifts for every good child, the North Pole falls far behind schedule, leading Northcutt to assign the third strike, shutting down the workshop. Fred leaves, taking his money and a gift from Nick.
Fred opens his gift: a replica of the birdhouse Chirp Chirp lived in and a note from Nick apologizing for cutting down the tree. With a change of heart, he uses the seed money to make his way back to the North Pole. There, Fred motivates the elves to make as many gifts as possible, having them focus on simple toys.
Due to his back injury, Nick is unable to deliver gifts. Feeling guilty, Fred decides to deliver the presents (as only a Claus can deliver them). He reminds Nick that naughty kids are not bad, just kids going through bad situations, and suggests every child deserves a gift on Christmas. Fred gets the workshop to quickly make simple gifts so that every child gets a toy.
Fred and Willie begin to deliver the gifts, but Northcutt sabotages their efforts and fires the elves. Nick confronts him and, realizes he was also bullied as a child, leading him to lash out at others. He apologizes to Northcutt for putting him at the top of the Naughty List in 1968, so gives him the Superman cape he had asked for as a child.
Disguised as Santa, Fred visits Slam and gives him the puppy he wanted for Christmas and advice to become a better person. After every gift is delivered, Fred returns to the North Pole while Willie finally starts a relationship with the tall elf, Charlene, Santa's "little" helper. Fred reconciles with Wanda and takes her to Paris.
The next Christmas, Fred and Nick have made amends and the now-reformed Northcutt has been hired to work at the North Pole as quality control, while Slam is adopted. On New Year’s Eve the Claus family reunite, and Chirp Chirp finally returns to the Clauses, living in the birdhouse Nick gave Fred.
