It's Christmas Eve on Sesame Street and everyone, especially Big Bird is excited for Santa Claus. That is until Oscar the Grouch raises doubts as to how Santa Claus can deliver presents if he can't fit through narrow chimneys. This leaves Big Bird greatly concerned, so after he and his friends Patty, Kermit, and Grover can't figure it out, he deices to stay up all night to see. Meanwhile, Cookie Monster tries to contact Santa by writing a letter, but winds up eating his pencil and typewriter, and after trying to call him, eats his telephone! Bert and Ernie also re-enact O'Henry's classic tale, The Gift of the Magi by giving up their paper clips and rubber duck for respective gifts for each other. The special also has a few seasonal songs and an ice skating sequence, including Big Bird and a young girl skating.