Two of Santa's elves, Elwood and Nora, are vacationing in small-town USA when they receive an urgent transmission from the North Pole about a new law that forbids adults from disciplining children.

This sudden lack of consequences for kids has led to a worldwide epidemic of bad behaviour, and it's up to Elwood and Nora to stop it.

With the help of young Jessica, the elves set out to transform the wayward children from naughty to nice and rid the small town of an economic depression. As their friendship with the Christian girl blossoms, they discover the limits of their magic, the true meaning of Christmas, and the joy of helping others.