Ash, Misty, Brock, and their Pokémon are planning to spend the holidays in a cabin that was lent to them by Professor Oak. However, the Trainers leave to pick up the Christmas cake. Their Pokémon, Pikachu, Bulbasaur, Squirtle, Togepi, Psyduck, and Vulpix, are left at the cabin, with Pikachu in charge.
The Pokémon stare at the door for a while, until Togepi turns and heads off, with the other Pokémon following. Pushing their way into the living room, the Pokémon behold a beautifully decorated Christmas Tree. They stare at it for a while, until Squirtle notices the kitchen and points it out to the others. The Pokémon enter the kitchen, to find the table prepared for a party. They get on the table to have a closer look, with Togepi getting a lift from Bulbasaur. The Pokémon are instantly drawn to the colourful party hats, and are initially perplexed by them. Vulpix realizes its use and flips a hat onto its head. The others, getting the idea, do the same, except for Psyduck, whose hat falls down onto its tail. Togepi and Pikachu return to the living room, and start looking at the tree again. Togepi sees its reflection in a bauble and smiles. Pikachu does the same, then starts making funny faces at the ornament; his reflection causing Togepi to giggle.
Back in the kitchen, Bulbasaur picks up a Bulbasaur cookie from a plate. Nearby, Squirtle is pulling on the string of a party popper. Bulbasaur is about to eat the cookie when the party popper fires, startling both Squirtle and Bulbasaur. Bulbasaur flings the cookie into the air and into Squirtle's mouth, who eats it. Bulbasaur is angry about this, and Squirtle tries to apologize, but Bulbasaur isn't buying it. Squirtle is forced to make a run for it, with Bulbasaur in pursuit. Nearby, Vulpix is digging through a stocking and gets itself stuck inside. Vulpix attempts to shake it off. Not being successful, it tries to walk off casually, but ends up walking into a wall. Back on the table, Psyduck picks up a bottle of Pokémon Cider. It sticks the bottle in its mouth in an attempt to pull the cork off, but fails. Psyduck then hears the fizzing noise coming from the bottle and begins shaking the bottle around to make more noise.
Meanwhile, Bulbasaur is still in hot pursuit of Squirtle. Pikachu and Togepi, still at the tree, watch as they run past three times. Bulbasaur then uses Vine Whip, wrapping its vines around Squirtle, who, in its panic, runs around the tree, causing the vines to knock the tree off balance. Pikachu quickly pushes the tree back upright. Suddenly, Vulpix comes leaping into the scene and lands on top of the tree, tilting it back the other way. Pikachu quickly bolts around to the other side and shoves it upright again, with a bit more effort this time. The stocking having fallen off its head, Vulpix leaps back to the floor once the tree is upright once more. However, Bulbasaur hasn't given up the chase of Squirtle, who ends up running around the tree again. This time, however, Squirtle's leg gets caught up on a string of lights, which threatens to send the tree falling over again. Vulpix runs for it while Pikachu begins to strain to hold the tree upright once more. Back in the kitchen, Psyduck's shaking causes the cork to blow out of the bottle, sending it toppling backwards. The cork shoots up and ricochets around the room before hitting Pikachu in the face. Pikachu hits the floor, and the tree comes down right on top of it. Bulbasaur's chasing ends, and both it and Squirtle, as well as Vulpix, look to see what happened. Pikachu eventually emerges from under the fallen tree, and Squirtle and Bulbasaur burst into laughter. Pikachu angrily stands up, and Bulbasaur and Squirtle quickly clam up, knowing what's coming. Burning with rage, Pikachu unleashes a powerful Thunderbolt attack. However, the electricity goes straight into the lights and blows out the power in the whole cabin. The Pokémon are left in darkness, and they're looking around, wondering what happened.
Pikachu makes his way to a Music Box that fell off the tree and pulls it upright. It opens, and a beautifully lit tree model is inside, and music begins to play. Awed by this, the Pokémon gather around to watch it. The music plays out, though, and both the music and the lights stop, leaving the Pokémon disappointed.
Pikachu, however, realizes that, with a bit of work, the fallen tree behind them could be just as beautiful, and explains this to the others. The other Pokémon eagerly accept this, and soon, Squirtle, Bulbasaur, Pikachu, and Vulpix are working to set the tree up again, while Togepi and Psyduck work together to gather up the fallen ornaments.
When Ash, Misty, and Brock return, they find the cabin pitch black. Brock points out that it gets dark early now. When they enter the living room, they are greeted by Pikachu's cheerful "Pika-Pi!" The Christmas Tree then lights up, and it's revealed that the Pokémon are sitting in front of it, Pikachu holding the plugs to the lights and the music box to his cheeks. Ash and his friends enjoy the spectacular, then Ash recommends that they start the party. Misty cuts the cake, to which Ash orders a big piece. They all wish each other a Merry Christmas. Meanwhile, Santa Claus’s sleigh is darting its way across the night sky.