Nekega božičnega večera se dojenček v sirotišnici neopazno splazi v Božičkovo vrečo z igračami in tako pristane v Božičkovi delavnici na severnem tečaju. Čez dolga leta Buddy zraste in postane trikrat večji kot drugi škrati. Takrat vsem postane jasno, da ne sodi v njihov svet, zato se odpravi iskat svojo pravo družino. Odpotuje v New York, kjer naj bi bile njegove korenine. Tam pa ga čaka nora pustolovščina.
Buddy was a baby in an orphanage who stowed away in Santa's sack and ended up at the North Pole. Later, as an adult human who happened to be raised by elves, Santa allows him to go to New York City to find his birth father, Walter Hobbs. Hobbs, on Santa's naughty list for being a heartless jerk, had no idea that Buddy was even born. Buddy, meanwhile, experiences the delights of New York City (and human culture) as only an elf can. When Walter's relationship with Buddy interferes with his job, he is forced to reevaluate his priorities.