A department store Santa tries to convince a little girl who doesn't believe in Santa Claus that he is Santa Claus, and winds up going on trial to prove who he is.

A discarded silk top-hat becomes the focus of a struggle between a washed-up stage magician and a group of schoolchildren, after it magically brings a snowman to life. Realizing that newly-living Frosty will melt in spring unless he takes refuge in a colder climate, Frosty and Karen, a young girl who he befriends, stow away on a freight train headed for the north pole. Little do they know that the magician is following them, and he wants his hat back!