Arthur delivers the gift with an assist from his entire family. His family realize that Arthur should be the next Santa Claus.
We open on Christmas Eve as a giant airship manned by elves and employing cutting edge technology (an array of cameras, cloaking device, heat censors) is manned by Santa's elves. We watch as the elves infiltrate each home and leave presents for the children (and use the food left out for Santa as bio-fuel for the airship).
We meet all the members of the Claus family. Santa (Jim Broadbent) is completing his 70th mission (after which, Santas typically retire). He is well-meaning, but largely ineffective at his job (the elves doing most of the work). Mrs. Claus (Imelda Staunton) ensures they do not violate any international laws and are undetected. Grandsanta (Bill Nighy) detests the entire operation, yearning for the days when it was just him in his sleigh. Santa's oldest son Steve (Hugh Laurie) is the heir apparent to Santa and essentially plans and runs the present-delivery operation in a militaristic fashion from his command center on the airship. And younger son Arthur (James McAvoy) is a well-meaning klutz who is in charge of responding to letters written to Santa by children worldwide. After all presents are delivered, Santa announces that he intends to run the operation again the following year, much to everyone's dismay.
After the Clauses return home, it is discovered that one child's present was not delivered. After a debate between the Clauses about what to do, Steve says that delivery is impossible before Christmas morning and they will mail the presents to the child (although Steve is a masterful operations manager, he lacks both charisma and the Christmas spirit). Arthur is crushed that one child will have her heart broken Christmas Day when she wakes up to find no presents. Grandsanta takes Arthur aside and reveals that he still has his old sleigh and the descendants of the original reindeer. The pair, as well as an enthusiastic elf named Bryony (Ashley Jensen) venture off to deliver the present. Along the way, they are picked up by multiple countries' satellites, almost get eaten by lions in Africa, cause property destruction, lose a number of reindeer, and are believed to be aliens by the world governments.
Steve eventually learns of the group's misadventures and demands they return to the North Pole before any further damage occurs. Arthur becomes disenchanted with his family when he realizes that Steve simply doesn't feel that missing one child is important, that Santa himself went to sleep rather than staying up all night despondent at the failure to deliver the gift (as he claimed he would do), and that Grandsanta agreed to deliver the gift not out of Christmas spirit but to prove to Steve and Santa that the old ways of delivering gifts were still valid. But when Arthur re-reads the letter sent by the girl who they missed, he realizes that it doesn't matter how any Santa views the holiday, but how the children view Santa, i.e., it is the children who possess the true Christmas spirit. With renewed vigor in not wanting to destroy the girl's faith in Santa, he and the group take off to finish the mission.
The rest of the elves learn that one child has been forgotten and they question Santa and Steve about how they determined that one child "doesn't matter." Santa, Mrs. Claus, and Steve reluctantly venture off in their airship to aid Arthur in delivering the gift, and their efforts are equally as disastrous (and Steve realizes he simply has no rapport with children). They also briefly discuss Santa's failings as a dad (he has given more time and effort to his job than to his kids). Eventually, they all arrive at the town as dawn the sun is rising (Grandsanta's sleigh is blown up by the world governments who believe it to be an alien craft). Arthur, Steve, Santa, and Grandsanta all convene in the house and an argument breaks out as to who will deliver the gift. Santa eventually decides that Arthur has earned the right to deliver it and then the foursome (for the first time ever) hide and decide to watch the child open her gift. They are all touched by the girl's joy that Santa came and realize that Arthur was the only one who put the children ahead of their own ego. As they leave the house, Arthur falls down in the snow and it covers his face like a traditional Santa Claus. The little girl catches a glimpse of the snow covered Arthur before he ascends to the airship and believes him to be the real Santa.
The family agree that Arthur is the right person to be Santa. Santa retires to finally devote time to his family. Steve accepts that he is best suited to manage each Christmas Eve mission from the North Pole and no longer yearns to be Santa himself. Arthur honors Grandsanta by having the airship named after his old sleigh and has reindeer power the airship. Bryony is moved into operations and leads a team of elves on Christmas Eve missions. And Arthur, himself, takes on the mantle of Santa Claus.
Also including the voices of Laura Linney, Eva Longoria, Joan Cusack, Robbie Coltrane, Michael Palin, Andy Serkis, Sanjeev Bhaskar, Dominic West, and Rhys Darby