Steve arrives in Albuquerque, New Mexico and tracks down his grandfather, Al Brown, a diner owner. Al explains that his daughter gave up Steve because she was very young and wanted him to have a good home. He sadly reveals that Karen Brown died in a car accident many years ago. Steve leaves flowers at her grave, and convinces an eccentric Santa-like charter pilot to fly him home for Christmas. Back in California, Cindy is depressed about her first Christmas in Beverly Hills. She invites the kids' friends and their families for Christmas Eve dinner, but everyone has other plans. Brandon visits Emily in a psychiatric hospital, where she is doing very well. Meanwhile, Brenda begins work at an upscale clothing store. A mysterious old man steals a Santa Claus suit from Nat at the Peach Pit, and later shows up at the boutique store where Brenda works. She feels bad when her brass boss throws out the cheerful old man. After work, Brenda stops the police from harassing the old derelict wearing the Santa suite and invites him over for dinner, much to the wariness of Jim and Cindy. Also, Dylan goes to see his father in prison, and talks with the same Santa. Elsewhere, Kelly's mother, Jackie, is furious when David's father, Mel, backs out of Christmas Eve plans because his estranged wife asked him to come over with David. Samantha, Kelly, Jackie, Andrea, David, Mel, Donna, Dylan, and Steve all show up at the Walsh house for dinner and caroling. The old man in the Santa suite gives everyone presents and describes his lonely life: his children are grown and his wife died a year earlier. He thanks Brenda for her kindness and generosity, then mysteriously disappears as footsteps are heard on the roof.

Brandon learns a lesson in dedication to a task and hard work when he falls for Tricia, a young ice skater with Olympic goals, whom he pleasantly distracts from her skating practice. Meanwhile, Brenda must deal with a back-stabbing boss at her boutique job in which Cindy offers Brenda a chance to get back at her.