Over the next few scenes, we see how Fred and Nick develop as people, particularly the development of some Christmas traditions. First, on Nick’s birthday, Fred makes a special journal with Nick’s name on it as a present. After opening all of his gifts, Nick puts them in a box and tells his family he is going to take them to the homeless boy who lives around the corner, because giving gifts brings him joy. Mother Claus is obviously very pleased with her son, while Fred is angry that Nick is giving away his thoughtful gift. However, as Fred gets upset, Mother Claus says that Fred should learn to be more like his brother, causing Fred to be upset and to resent Nick.
Since he feels his family does not understand him, Fred often climbs a large tree in the woods, and visits the only person who understands him: a bird named Chirp Chirp, living in a birdhouse in the tree. As Fred confides to the bird about his problems, the tree suddenly falls down, crushing the birdhouse and causing Chirp Chirp to leave. It turns out that Nick cut down the tree; since Fred liked the tree so much, Nick thought it would be a great idea to bring the tree inside and put gifts underneath it. This is clearly the last straw, and causes a permanent rift between Fred and Nick. As Everybody was exchanging gifts, Fred sat in a corner and threw a tomato at Nick.
As we cut to the present day, the narrator explains that when Nick became a saint due to all his good deeds, Nick, his spouse, and immediate family became frozen in time, never to age, something which happens to all saints. While we assume Nick has gone on to become the modern-day Santa Claus, we find that Fred now runs a Repo company, steals whatever he repossesses, and is obviously not well liked. He then goes to see his girlfriend, Wanda (Rachel Weisz), who gets mad at Fred for forgetting that her birthday was tomorrow. She also references that for their anniversary last year he had dropped hints about the Eiffel Tower and having her take French lessons, only to give a bad gift rather than an implied trip to France. Fred promises that they will be going to a new hotspot for her birthday (although he did not check out the restaurant, only naming the restaurant he sees on a billboard).
The next day, we see that Fred wants to buy a property to open up a gambling facility, but needs to come up with $50,000 by December 22nd to secure the property. To get money, Fred grabs a Santa hat and a tin container and pretends to be working for the Salvation Army to get money. When the real Salvation Army Santas confront him, a comical chase ensues, ending with Fred’s arrest. Needing $5,000 bail, Fred tries calling Wanda, who does not answer because she is waiting for him at her birthday dinner. This turns out to be at a disgusting restaurant where men are watching sumo fights in the middle of the room. The policeman takes pity on Fred and lets him make one more phone call, and he calls his brother Nick. Fred tries to convince Nick to send $55,000, and Nick almost agrees, but Mrs. Claus (Miranda Richardson) instructs her husband to use tough love. As a result, Nick says that he will send $5,000 to bail his brother out of jail, but he will have to come to the North Pole and earn the remaining $50,000.
Back at his apartment, Fred is packing up when a boy named Slam (Bobb'e J. Thompson) comes in, who obviously does not have a stable living situation. He talks about wanting a puppy for Christmas, but Fred tells him not to count on others for things. At this time, family services shows up because Slam’s home is unfit and he is moved to an orphanage.
Soon after this, an elf named Willy (John Michael Higgins) shows up to take Fred to the North Pole. We learn that Willy is the head elf, and has a crush on Santas Little Helper Charlene, although she cannot even remember his name. Once Fred and Willy arrive at the North Pole, Nick welcomes Fred warmly and shows him around, including the naughty/nice room. In this room, it shows a Top Ten List of the 10 naughtiest children at any given time. There is also a humungous snow globe in the room, where you can say any persons name and see if they are being naughty or nice. Fred asks to see Wanda, and we see his girlfriend talking to a man on the street. The man asks Wanda if she has a boyfriend, and she says no (obviously upset that he stood her up on her birthday), and they agree to have dinner in the near future. Nick shows Fred where he will be working, looking at children’s files and determining if they are naughty or nice, and stamp their files accordingly.
While Fred starts working, Nick and Mrs. Claus are introduced to Clyde Northcut (Kevin Spacey), an efficiency expert who has come to assess workings at the North Pole. He says the group has recently dumped the Easter Bunny and has limited the Tooth Fairy to a one person/one tooth rule. Further, if Nick gets three strikes by Christmas, Clyde will shut them down and relocate them to Antarctica.
Back at the workshop, Fred starts getting restless, particularly because the DJ elf keeps playing "Here Come Santa Claus" over and over on a continuous loop. Fred locks the DJ in a cupboard, puts on some dance music, and convinces the elves to vacate their stations to join in the dance party. Nick, Mrs. Claus, and Clyde walk in on this, and Clyde says that Nick’s inability to control his work staff is Strike No.1.
That night at dinnertime, Nick convinces Fred to come to dinner with their parents and Clyde, and its clear that Fred hasn’t spoken to his parents in years. Sitting down to dinner, Fred’s mother continues to brag about Nick and still says Fred, you should try to be more like your brother. Fred storms out and heads to Frosty's Tavern and has a drink with Willy. Willy discusses his lack of self-confidence regarding Charlene, and Fred tries to teach him to dance. Unfortunately, Charlene (Elizabeth Banks) enters the tavern just as Willy falls on his face, and runs off embarrassed.
Later, when everyone else is asleep, we see Clyde sitting in Fred’s office, using a shredder to destroy many of Fred’s naughty/nice records. The next morning, while Nick is blaming Fred for the infraction, Clyde walks by smirking and says that was Strike No.2. Suddenly we hear the Top Ten Naughty List changing, and Fred is shocked to see that Slam is now the No.1 naughty kid. We see Slam arguing with the other children in the orphanage, saying the same types of things that Fred has said to Slam earlier. Fred realizes that children are not really naughty, but that they are just scared, bitter, or misunderstood, and don't know how to handle their situations properly. Therefore, Fred starts stamping every file as nice, and no one as naughty. Nick quickly realizes what Fred is doing, and knows that the elves will never make quota if every child is nice and needs toys. Nick and Fred end up in a snowball fight outside, which eventually gets physical and causes Nick to put out his back.
Frustrated with his entire family, Fred leaves the North Pole with his $50,000 as soon as they reach December 22nd, but Nick gives him one present to take with him. Fred waits until he returns home to open the gift, which is a copy of Chirp Chirp's birdhouse with a note that says "I'm sorry I cut down your tree." Obviously confused about his feelings towards Nick, Fred enters into a Siblings Anonymous meeting, where he is joined with the brothers of Alec Baldwin, Sylvester Stallone, and Bill Clinton. Eventually, Bill's brother makes a nice speech about how, even though he could have ruined everything for his brother who he resented, he chose to be a good brother and let him be successful.
Back at the North Pole, it looks as though Christmas is lost: Nick can hardly get out of bed because of his back, and Clyde has given Nick Strike No.3 because Fred marked everyone as being nice, rather than a mix of naughty and nice. However, 10 hours before the deliveries should start, Fred shows up! It turns out he used the $50,000 to charter a plane, boat, and sled dogs to get back to the North Pole and help out. Without Clyde’s knowledge, Fred and the elves work tirelessly to make at least one toy for each child, with no reference to whether they are naughty or nice. However, Nick still cannot drive the sleigh, and only a Claus can deliver the toys. As a result Fred decides to be a good brother and deliver the toys. With Willy’s help in the sleigh (and elves back at the North Pole serving as mission control), Fred starts delivering presents around the world (including giving a puppy to Slam and telling him to care about others), but has to be back to the North Pole before sunrise, otherwise Christmas will be permanently shut down. Fred starts delivering toys, albeit without any gracefulness, with the help of Willy and the other elves. However, halfway through the night, Clyde pulls the electricity at the workshop, so that the elves can no longer give directions to Fred and Willy. While Fred and Willy try to finish delivering the gifts, Nick goes to talk to Clyde, finally realizing why he was holding such a grudge. He remembered that Clyde made the naughty list in 1968. It turns out that as a child, Clyde, because he wore glasses, had always been picked on by other kids, who had given him the name "Four-eyed Clyde". That Christmas, he wanted a Superman cape, so he could finally feel like a hero, but had always been on the naughty list because he would pick fights with the kids who picked on him. Nick gives Clyde the cape he had always wanted, ending the grudge between the two. Clyde tries to turn the electricity back on, but it still will not work, so Fred and Willy are on their own.
All the elves wait nervously at Frosty’s tavern, and are upset to see dawn approaching. But at the last minute, Willy and Fred return, successful in their efforts. Willy, with a renewed confidence, goes to kiss Charlene, who can now remember his name and obviously returns the sentiment. With Christmas saved, Fred returns to Wandas house, but she is still furious with him. However, Fred feels renewed hope when we find out she never met the other man for dinner, and gives her a present. She opens it to find a teddy bear holding a French flag, implying that he is going to keep his promise to go to France.
As the movie concludes, we see how everyone is doing now: Fred and Wanda got back together, and used the sleigh to travel to Paris and see the Eiffel Tower. Charlene and Willy are now happily together. Clyde now works at the North Pole as a consultant, and helps the elves to meet their quota without problems. Finally, we see Fred and Wanda meeting with Nick, Mrs. Claus, Mother and Father Claus for dinner, showing that they have become reconciled and come together as a family.
|Vince Vaughn||Frederick "Fred" Claus|
|Paul Giamatti||Nicholas "Santa" Claus|
|Miranda Richardson||Mrs. Claus||Nick's mythical wife|
|Kathy Bates||Mother Claus||Fred and Nick's parents|
|Trevor Peacock||Papa Claus|
|Rachel Weisz||Wanda||Fred's girlfriend|
|Kevin Spacey||Clyde Northcut||Efficiency expert assessing workings at the North Pole|
|Bobb'e J. Thompson||Slam|
|John Michael Higgins||Willy|