After a carnival troupe saves his life, a man agrees to help its immortal leader collect five souls and win a bet with the devil.

In the days leading up to Christmas a young girl, Leah Carpenter, moves to a new city with her parents. While at Santa's workshop in the North Pole, Santa Clause is meeting with Shaily, the youngest fairy ever to be asked to help Santa keep track of all the children on the "Naughty and Nice" list. Shaily comes to visit Leah and the two become fast friends and although she knows it is against the rules, Shaily takes Leah into the fairy world where their new friendship is tested and their true adventure begins.