After faithfully and happily celebrating Christmas their entire lives, and with their daughter Blair (Julie Gonzalo) in Peru to serve a stint in the Peace Corps, Luther (Tim Allen) and Nora (Jamie Lee Curtis) Krank are facing the prospect of a very lonely holiday.

One blustery Chicago night, Luther glances longingly at an alluring poster in a travel agency window and pictures himself and Nora basking in the glow of the sun on a Caribbean cruise. What if this Christmas there was no tree, no holiday lights, no fruitcakes, no parties, no decorating, no Christmas?

Though Nora is at first reluctant about going away for the holidays, she soon warms to the idea. But when their neighbors up and down Hemlock Street find out, they are aghast, especially local busybody Vic Frohmeyer (Dan Aykroyd). Among the other injured parties are local police officers Salino (Cheeck Marin) and Treen (Jake Busey), as well as Luther's neighborhood sparring partner Walt Scheel (M.Emmet Walsh).

The Kranks are skipping Christmas? Unimaginable. Unthinkable. Unbearable. To make matters worse. Luther refuses to put his illuminated Frosty the Snowman on his rooftop. Every house has a Frosty on its rooftop at Christmas. Hemlock Street is famous for it and has won numerous contests sponsored by the local newspaper for its Yuletide decorations.

The battle of wits between the Kranks and their neighbors quickly escalates, threatening the harmony of the community and, yes, the spirit of Christmas itself.

Then, without warning, Luther and Nora get a phone call from Blair. She's coming home for Christmas after all.

Now the Kranks have less than twenty-four hours to get themselves and all the families on Hemlock Street back in the proper Christmas spirit.