Christmas has always been an exceptional time of love and tradition in the small town of Trapper Falls, Alaska. Hometown of Mayor Dan Reed (Ted McGinley) looks forward to each year with enthusiasm to all the events, friends and family that fill this special season. Together with his brother Greg (Brad Stine), they dedicate time away from their adventure tour company to drape the town is Christmas cheer. When Dan's old high school rival Mitch Bright (Daniel Baldwin), a mean-spirited and embittered militant atheist returns home after 20 years, Dan is immediately suspicious. Mitch is a highly successful big city lawyer who has never wanted anything to do with Trapper Falls. The rivalry re-ignites when the frustrated Mitch takes offense to what he sees as the town's violation of his rights. Mitch wants the Nativity scene removed from the front of City hall and the word Christmas switched to Happy Holidays on all signs. Fifty years of tradition are now challenged not by an outsider but a former member of the community. As the conflict escalates it goes beyond one person's opinion but magnifies into an entire town problem when Mitch enters into the mayoral race to have Dan replaced.

In the heat of the legal battle and facing certain defeat, Dan's wife Kristen (Nancy Stafford) and their daughter Makayla (Francesca Derosa) wanting to show, what she believes to be, the true meaning of Christmas are inspired to launch a "Christmas with a Capital C" campaign as an effort to keep the town together. In doing so they discover the secret behind Mitch's return. He is looking for love and acceptance but can't find it in the world of high-flown success.