Concerned that things are strained with Will since she married Carl, Emma finds out that Will's planning to spend Christmas alone. She invites him to come to their holiday cocktail party, but Will thinks that they need some distance. Coach Beiste oversees the McKinley faculty's Secret Santa selection, and Will draws Sue's name. Discussing what they want for Christmas, Artie realizes that Brittany still believes in Santa Claus.
The glee club decorates the music room while singing "The Most Wonderful Day of the Year" from the classic "Rudolph the Red Nosed Reindeer" TV special. They tell Will the tree they found on the side of the road that they're decorating with second-hand ornaments represents them: while they've won sectionals two years straight, everyone else at they school still thinks they suck - illustrating their point, they flashback to Karofsky and Amizo dousing Tina, Mike, and Mercedes with holiday slushies (actually real parking lot slush with red-and-green food coloring). Will refuses to let the students feel sorry for themselves, urging them to focus on the things that have turned out great in the past year - he plans to have the club give back by volunteering for Lima's McKinney-Vento Homeless Children and Youth Program (it's a real charity - check it out!), raising money by caroling in the McKinley classrooms: "This year the glee club's going full-Santa."
New Directions tries singing "We Need a Little Christmas" in the classroom but are violently rejected by their fellow students (and a shoe-throwing teacher). Finn argues for keeping up their Christmas spirit, and Brittany reveals that this year she's asked Santa to stop the club from being picked on; Artie quietly asks the club to preserve her delusion and keep her holiday magical a little while longer - and he's got a plan.
The glee club makes a visit to a department store Santa (Brittany confides to an elf that she doesn't understand the difference between an elf and a slave), as Artie thinks that if they each ask the Santa for a gift, it'll bolster Brittany's belief. After they make their requests, Brittany tells the Santa, who she remarks has gotten really tan (he's black), that she wants her boyfriend to be able to walk. Santa says he's on it. "Now we're screwed," says Artie.
Meanwhile, Rachel asks to see Finn privately. She's created a winter wonderland of artificial Christmas trees, AV club-created snow, and a backing band to impress him, offering him a rare Christmas gift (yes, she's Jewish, but she knows what the holiday means to him). Rachel offers to sing him a song, but he resists, knowing that she's trying to win him back after their breakup. He's not ready to forgive her and leaves, but she sadly sings her song anyway: The Carpenters' "Merry Christmas Darling."
At Dalton Academy, Blaine asks Kurt to stop studying so he can help him rehearse for a gig, singing "Baby, It's Cold Outside." They share a flirty duet, and Kurt receives a surprise visit from Will, who needs his help overcoming his poor holiday shopping skills to find a present for Sue.
Back at McKinley, Will discovers that Emma's also drawn Sue as her Secret Santa, as has Coach Beiste: "I'm EVERYBODY's Secret Santa," Sue reveals, having rigged the outcome with some assistance from Becky. "I hate Christmas, but I love presents," she explains. She vows to keep all the presents (as an honorary Lima police officer, she claims them as her property and threatens to jail anyone who tries to take them; she also licked each one so that no one would touch them) and effectively steal Christmas.
However, after human resources deems Sue's misrepresentation illegal, Will "repos" all her gifts, with the staff agreeing to donate them to homeless kids, calling Sue a Grinch. Artie, Sam, Puck, and Mike ask Coach Beiste to pose as Santa for Brittany and deliver a plausible explanation as to why her wish for Artie to walk wasn't granted, in hopes of not disillusioning her.
With Becky outfitted as the Grinch's "rein-dog" Max, Sue paints her face green, dons a Santa suit (the disguises are for "plausible deniability"), and plans to retake her confiscated gifts. To the music of "You're a Mean One, Mr. Grinch" from the Dr. Seuss animated special (slightly reworked as "Sue the Grinch"), Sue and Becky stealthily swipe the presents back and trash the music room and its Christmas directions.
They're discovered by Brittany, who - like Cindy Lou Who - thinks Sue is Santa. Sue continues the charade and convinces her that she's just fixing the tree, as she takes the dollhouse that Brittany brought for the homeless kids.
After Will and the glee club discover Sue's mischief, Brittany's belief that she encountered a male Santa further confuses the group and throws suspicion off Sue. The students think the culprit may have been one of the football players who torment them.
Finn refuses to let the incident get them down, and Rachel asks to help him try to save the glee club's Christmas. They shop for Christmas trees together, and as she continues to try to win him back, Rachel sings Wham's "Last Christmas," with Finn eventually joining in. She tells him that last Christmas she asked Santa to give her Finn, but as she tries to kiss him, he pulls away. Still hurting from Rachel's betrayal with Puck (and Quinn's), he refuses her plea for forgiveness and officially breaks up with her.
In a "Gift of the Magi"-inspired move, the glee guys plan to sell their watches and the glee girls want to sell their hair to raise money to buy gifts for the homeless kids, but Will refuses to let them. Since none of them have actually read the story, Will explains that it's really about losing the childhood magic of Christmas and desperately trying to reclaim it amid the disillusionment of adulthood. He vows to help them bring Christmas spirit to someone who really needs it through song.
Brittany discovers Santa Claus - the disguised Coach Beiste - making an early stop at her home ("I was in the neighborhood making a dry run"). Santa Beiste explains that even St. Nick's magic can't make Artie walk, and that the gift Brittany really needs is patience: she tells her a story from her own childhood as "a husky girl" asking Santa to make her look more like other girls, but when her wish wasn't granted, she eventually was glad she received the patience needed to learn to put her uniqueness to good use.
Santa Beiste's story doesn't quite land with Brittany, whose Christmas spirit begins to fade because she can't wish Artie to walk again. As Artie tends to his sad girlfriend, the rest of the glee club assembles to sing for the faculty, hoping to lift the spirits of the educators. At that moment, surrounded by her reclaimed gifts, Sue tells Becky that for her, "the real joy of Christmas was breaking the heart of the glee club."
New Directions sings "Welcome Christmas" from "How the Grinch Stole Christmas," warming the hearts of the staff. "Christmas came anyway, Coach," Becky tells Sue. "It's beautiful." And, surprised to find herself so moved, Sue admits that it is.
Rachel invites Will to spend the holidays with her family, but he tells her (unconvincingly) that there's nothing wrong with being alone. The glee club returns to the music room and is surprised to discover that all the presents and decorations have been restored, and something even more amazing: with the aid of robotic device called a ReWalk that was mysteriously discovered under Brittany's Christmas tree, Artie is able to stand and walk. With no obvious source of the ReWalk, the club has to agree with Brittany's conclusion that Santa brought it (and in a way "Santa" did, judging by Coach Beiste's very pleased expression as she secretly watches Artie walk with his friends).
Will comes home alone to discover that Sue has filled his home with a tree and presents, offering her apology as a "Christmas miracle." She even offers him a gift: hair clippers to "put us all out of our misery and shave off that Chia Pet." He thanks her, and Sue reveals that she had some helpers: the glee club appears to keep Will from spending Christmas Eve by himself.
"I thought you hated Christmas," Will says to Sue. "No," she replies, "I just hate you." As the kids trim his tree, Will and Sue wish each other a Merry Christmas.