Halloween Town is a fantasy world filled with various monsters and supernatural beings associated with the holiday. Jack Skellington, the “Pumpkin King” and leader of the town, leads them in organizing the annual Halloween celebrations. However, privately Jack has grown weary of the same routine year after year and wants something new. Wandering in the woods the morning after Halloween, he stumbles across seven trees containing doors leading to towns representing various holidays, and opens a portal to Christmas Town. Awed by the unfamiliar holiday, Jack returns to Halloween Town to show the residents his findings, but they fail to grasp the idea of Christmas and compare everything to their ideas of Halloween, although they do relate to one Christmas Town character; a red lobster-like king who flies at night named “Sandy Claws”. Jack sequesters himself in his tower to study Christmas and find a way to rationally explain it, but cannot. He ultimately decides that it’s unfair for Christmas Town alone to enjoy the holiday and announces that he and the citizens of Halloween Town will take over Christmas this year.
Jack assigns the citizens of Halloween Town Christmas-themed jobs, including singing carols, making presents, and building a sleigh to be pulled by skeletal reindeer. Sally, a beautiful rag doll woman that is secretly in love with Jack, experiences a vision that their efforts will end in disaster, but Jack dismisses this and assigns her the task of sewing him a red coat to wear. He also tasks Lock, Shock and Barrel, a trio of mischievous trick-or-treating children, to abduct Santa Claus and bring him back to Halloween Town. Jack tells Santa he will be bringing Christmas to the world in his place this year. Jack orders the trio to keep Santa safe, but the children instead deliver Santa to Oogie Boogie, a gambling-addicted bogeyman, who plots to play a game with Santa’s life at stake. Sally attempts to rescue Santa so he can stop Jack, but Oogie captures her as well.
Jack departs to deliver presents to the world, but the Halloween-styled gifts terrify and attack the populace. While news reporters send word via radio about the Santa-impostor, the military takes action and shoots down Jack, causing him to crash in a cemetery. While the devastated residents of Halloween Town think he’s been blown up and killed, Jack has survived, and while he bemoans the disaster he has made of Christmas, he finds he enjoyed the experience of scaring the children nonetheless, reigniting his love of Halloween. But first, he realizes he must take action to fix his mess. Jack returns to Halloween Town and finds Oogie’s lair. Oogie tries to kill Jack, but Jack pulls apart the thread holding his cloth form together, revealing a massive pile of bugs that fall into Oogie’s cauldron, killing him. Jack apologizes to Santa for his actions, and Santa, while still angry at Jack, assures him that he can fix things and returns to Christmas Town.
As Santa replaces the Halloween-style presents with genuine ones, the townspeople of Halloween Town celebrate Jack’s survival and return. Santa then visits Halloween Town and brings them a snowfall for the residents to play with, which in a way, fulfills Jack’s original dream. In the graveyard, Jack and Sally declare their love for each other.