In the ancient Holiday worlds, the king of Halloween, Jack Skellington has had enough. Every year, it's the same thing: Screams, scares, horrors, blah blah blah. He so desperately wants something different, and eventually wanders out and into Christmas Land.
He is tremendously enamored with this new thing. He loves the concept and feeling he gets from this place, and tries to share it with his fellow Halloween creatures. But they misunderstand, thinking of Christmas as being a new style of scaring.
Eventually, Jack decides to have Halloween Land do Christmas this year. So he gathers everyone in the Land and has them work on bringing Christmas, Halloween-style, to the world. He even has Santa Claus kidnapped, claiming that he's doing this to give Santa a break this year.
Unbeknownst to Jack, the three little rascals he has capture Santa have sinister plans in mind for the Christmas icon. They give him to Oogie-Boogie, the Boogie-Man, the most vicious, evil creature in Halloween. And Oogie-Boogie loves to play deadly games, which he always rigs in his favor...
Halloween assembles their version of Christmas, and starts to head out. Sally, a shy, but free-spirited rag-doll created by the town's mad scientist, who loves Jack dearly but has enough sense to realise how wrong Jack's plan is, tries to stop him, but Jack heads out.
So Sally decides to take things into her own stitched-together hands, and heads off to rescue Santa Claus. But things don't go as planned, and Oogie-Boogie captures her as well.
Jack delivers his sinister brand of Christmas to children all over the world, giving shrunken heads, demonic toys, killer jack-in-the-boxes, man-eating wreaths, and everything eating giant-snakes, all innocently given, unaware that he's causing even more scares. Jack is too blinded by the simple act and feeling of giving something to the people to see what's happening, a horror that everyone in Halloween Town save for Sally (who hates it) and Oogie-Boogie (who's unaware of what's going on) is enjoying greatly.
The military is brought in, and Jack is eventually shot down. He lands in a graveyard, in the arms of an angel-statue. It's there that he finally realises how badly he has screwed up. But he also realises what he IS good at, and becomes excited at the thoughts of next Halloween. Then he realises that he has to save Christmas first.