When successful attorney, Mitch Bright (Daniel Baldwin), returns home after more than 20 years to the small town of Trapper Falls, Alaska he runs into his old high schools rivals: the Reed brothers, Dan (Ted McGinley) and Greg (Brad Stein). Dan is building a new platform for the town's traditional nativity scene, but he is the mayor of the town, the platform is being built with city money, and it's on city property. To top things off: Dan is even married to Kristen (Nancy Stafford) the girl both Dan and Mitch liked in high school. The first thing Mitch does is file a legal injunction against the nativity citing separation of church and state. The second thing he does is decide to run for mayor against his main rival Dan; Dan has been the mayor for years. Mitch accuses Dan of forcing his Christianity upon the entire town, then Mitch goes on a rant about the arrogance and hypocrisy of all Christians. Mitch has a way with people, and plans to bring more business to the town, and soon he begins swaying business owners all over town to abandon "Merry Christmas" for "Happy Holidays." Two sub plots involve Dan and Kristen's children. Their son, Cody, is a skier in competition with a girl for the upcoming Christmas race. Their young daughter, Makayla, is excited to be the angel in the church Christian pageant for the first time. After a judge comes to town to review the injunction and confirms they do not have a legal right to put the nativity on city property, Dan and Kristen have a meeting with their Pastor and a few other people to decide what to do about the nativity. Kristen draws the attention away from the nativity and toward the real meaning of Christmas. The pastor agrees, and between them the group decides to start acting like Christians "with a capital C," and they begin reaching out to the community in practical and helpful ways. These actions create a different atmosphere that spreads throughout the town...even, eventually, effecting Mitch.