The special starts with live-action versions of the Muppets enjoying an
ice skating party. Afterward, they head home to
Sesame Street performing the song "True Blue Miracle". In the main story,
Oscar the Grouch plants the seeds of doubt in
Big Bird's mind whether
Santa Claus can actually get down chimneys to deliver Christmas presents. Big Bird enlists the help of
Kermit the Frog and
Grover to interview children about how he manages it; their responses vary. Big Bird even attempts a reenactment with
Snuffy but it is unsuccessful. He spends the night out in the cold on the brownstone's roof, waiting for Santa to appear in person. After the residents of Sesame Street realize that Big Bird has gone missing,
Maria confronts Oscar for upsetting Big Bird. Oscar reveals that he was only teasing Big Bird and agrees to help search for him. Meanwhile, in a variation on the 1905
O. Henry story "
The Gift of the Magi",
Bert and Ernie want to give each other Christmas presents, but they have no money. Bert trades away his prized paper clip collection to buy a pink soap dish for Ernie's
Rubber Duckie, but Ernie has bartered it to get Bert an empty cigar box for his paper clip collection.
Mr. Hooper, the store owner, realizes what is happening and gives them their treasured possessions back as Christmas presents. Also,
Cookie Monster attempts to get in touch with Santa Claus to bring him cookies for Christmas. In confusion, he ends up violently eating a pencil, a typewriter to type a letter and a telephone to call the North Pole. At
Gordon and Susan Robinson's apartment, he laments to Gordon that he was unable to contact Santa. Gordon suggests leaving cookies for Santa, leaving him perplexed. In the end, Big Bird walks down from the roof to warm up, much to the relief of his friends. He realizes Santa Claus had already come and gone when he sees the presents under the tree (due to him falling asleep on the roof and Santa's shadow looms over him while he's asleep). He regrets not learning how Santa can go down chimneys, but he comes to recognize that being together with family and friends is more important. Oscar, true to form, starts needling him about how the
Easter Bunny can hide all the eggs in one night, only to be rebuked by Gordon and Susan as Big Bird begins to fret about the holidays all over again. The special concludes with Susan and Gordon returning to their apartment to find that Cookie Monster has eaten the needles and decorations off their Christmas tree. ==Cast==