Timmy Dickens holds up a sidewalk Santa Claus with a dart gun. Superman finds that the boy is under a powerful hypnotic suggestion. Carrying Dickens to his Fortress of Solitude, Superman uses alien technology to break the boy's trance. Timmy reveals that he had raided the closet where his parents stored all of his Christmas gifts. Upon firing the dart gun, there had been a flash. Dickens remembers nothing after that. Superman hypnotizes Dickens to unlock his lost memories. A tape recording on the gun instructed Dickens to rob the sidewalk Santa Claus, then deliver the loot to a local Big Shott Toy Store. Superman realizes that his old foe, the Toy Man is the culprit behind the crime. Superman is en route, back to Metropolis, carrying Dickens home, when the toy space craft in Dickens' hand emits a beam of energy, directly into Superman's face. The Man of Steel plummets to the Earth like a stone, just managing to twist his body enough to absorb all the impact, keeping Dickens from injury. Unconscious in the deep snow, all of Dickens efforts to revive Superman fail. The pair are discovered by a half dozen elves, who carry the unconscious Man of Steel to safety. The Toy Man has monitored the entire affair from his hidden lair in Metropolis.
Superman awakens in the abode of Santa Claus. Unable to believe the evidence before his very eyes, the Man of Steel, and Dickens, are taken on a tour of Santa's workshop. Santa Claus, it appears, is keeping an eye of the Toy Man. Despite the modernization of the workshop, Santa Claus bemoans the loss of the simpler times, when his elves cobbled together wooden soldiers and rocking horses. Superman, too, becomes nostalgic for his early childhood toys, specifically a Kryptonian holo-toy, capable of generating images directly from Superman's mind. Santa Claus gathers his giant sack of toys, and mounts up for his Christmas deliveries. Superman tries to make it back to civilization under his own steam, but still suffers from the effects of the Toy Man's weapon. Once again plummeting from the sky, Superman lands in Santa's sleigh, where he stays for the remainder of the journey. Arriving at the Toy Man's hideout, Superman enters through the chimney, taking the Toy Man by surprise. The Toy Man counters with an army of weaponized toys. Santa Claus provides support with his own army of weaponized toys. Still suffering the after-effects of the Toy Man's little space ship weapon, Superman finds he's hard pressed in the fight against the Toy Man's diabolical toys.
Santa Claus' toys provide the respite Superman needs to finally triumph over the Toy Man's automated forces. The Toy Man levels a toy gun, powered by white dwarf star matter, at the Man of Steel. Santa Claus scatters marbles across the floor, causing the Toy Man to lose his balance. The errant shot from the Toy Man's weapon hits one of his robot soldiers, instead of Superman. The mechanized monster plummets through the shop floor, it's momentum carrying it to the Earth's core. Superman uses his heat vision to melt the Toy Man's gun. With the Toy Man defeated, Superman uncovers a list of customers who have unwittingly purchased deadly toys from the Toy Man's stores. With Santa Claus' aid, Superman covers the entire continent, darting in and out of one home after another, replacing the Toy Man's gimmicked gifts with harmless replicas from Santa Claus' bag. Superman is just about to return Dickens to his home, when the little starship toy once again blasts the Man of Steel into unconsciousness. Superman awakens in the North Pole, with Dickens standing over him. The whole adventure with Santa Claus was nothing more than a dream. Superman carries Dickens back home. Reaching into the secret cape pocket for his civilian clothes, Superman finds his long lost Kryptonian holo-toy. Activating the device, Superman finds a Christmas message... from Santa Claus.