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 he 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 decides to stay up all night to see. Meanwhile, Cookie Monster tries to contact Santa by writing him, but winds up eating the pencil and typewriter, and after trying to call him, eats the telephone too! Bert and Ernie also re-enact O'Henry's classic tale, "The Gift of the Magi", by giving up their paper clip collection and rubber ducky for respective gifts for each other. The special also has a few seasonal songs and an ice skating sequence, including Big Bird being helped by a young girl.