After four years together, Scott Calvin and his wife Carol are expecting a new baby, who is set to arrive on Christmas Eve. Carol, feeling bored with her new life, decides along with Scott to bring the in-laws of both families to the North Pole for the season. Meanwhile, Santa along with the League of Holiday Figures decide to ban Jack Frost who, jealous of not having his own holiday, is trying to upstage Santa. After Jack destroys the usual Christmas operation and the family's love, Scott feels the only way to get things back to normal, is to resign from his job as Santa, which can be done so through the use of the Escape Clause of the Santa Contract. Unfortunately, Jack Frost sees this as the opportunity he needs for fame.