Long ago, a legendary lawman named Sheriff Kody Kringle rode into Chimney Rock and settled a violent land dispute between the founding families. He had them sign a charter granting the town square to everyone equally, planted a giant cactus to mark the deal, and then vanished. Every Christmas Eve since, the townsfolk leave a gift at the base of that cactus — and every Christmas morning, gifts appear in return. Nobody can explain it. Nobody asks.

Enter Juanito Bandito, a mustachioed outlaw who has come into possession of a dead man's journal revealing that a massive gold mine sits directly beneath the cactus. He sends his bumbling German accomplice, Mr. Grimm, into town posing as a government agent who threatens to seize the square. When the desperate townsfolk try to summon their legendary hero, Bandito rides in disguised as Sheriff Kringle himself — a flashy, Santa-fied western lawman — and offers to save them, if they'll all just sign one little document.