One Christmas Eve, a baby from an orphanage crawls into Santa Claus's sack and is unwittingly taken back to the North Pole. When the infant is discovered at Santa's workshop, the elves name him Buddy, after his diaper's brand label, and Papa Elf adopts him. Growing up, Buddy believes that he is an elf, but discovers in adulthood that he is actually a human. Papa Elf tells Buddy that his birth parents are Walter Hobbs and Susan Wells, the latter having put him up for adoption prior to her death. Walter now works for a publishing company at the Empire State Building in New York City, unaware of Buddy's existence. Buddy travels to New York and finds Walter at his workplace, but Walter mistakes him for a Christmas-gram messenger and has him ejected. Buddy then visits a Gimbels department store and becomes infatuated with a deadpan employee named Jovie. Hearing that Santa will visit the store the following day, Buddy redecorates the store overnight. However, upon realizing that the store's Santa is a man in a costume, he causes a brawl and gets arrested. Walter reluctantly bails Buddy out of jail and, after a DNA test confirms that Buddy is his son, takes him home to meet his stepmother Emily and half-brother Michael. Buddy wins Michael over by defeating a gang of bullies in a snowball fight, and Michael helps him to ask Jovie out on a date. Meanwhile, facing pressure from his boss to deliver a successful book by Christmas Eve, Walter arranges a meeting with ghostwriter Miles Finch. The meeting is ruined when Buddy, believing Finch is an elf due to his dwarfism, inadvertently offends him and causes him to storm out. Frustrated by the setback, Walter lashes out at Buddy, who, heartbroken and ashamed, writes an apology on an Etch A Sketch and prepares to leave the city. When Michael informs Walter of Buddy's departure, Walter quits his job to look for Buddy. Meanwhile, Buddy meets Santa in Central Park after Santa's sleigh loses its engine and crashes due to waning Christmas spirit. Buddy finds the engine and reunites with Walter and Michael; Walter apologizes for his outburst while Michael reveals the existence of Santa on live television. As Buddy and Santa are chased by Central Park Rangers, Jovie, recalling Buddy's statement that singing can spread Christmas cheer, leads a crowd of people in singing "Santa Claus Is Comin' to Town", generating enough Christmas spirit to power the sleigh without the engine. By the next Christmas, Walter starts his own independent publishing company, with the first bestseller being a children's book based on Buddy's exploits. Buddy also marries Jovie and has a daughter with her and during the film's closure, they visit Papa Elf at the North Pole.
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