The widow McDowell and her seven-year-old son Thomas ask the gruff Jonathan Toomey, the best wood-carver in the valley, to carve the figures for a Christmas creche.

Two towns, Tralee and Tralah, compete in an annual St. Patrick's Day decorating contest which Tralah boastfully always wins, but when their hearts are put to the test by a little man with pointed ears, Tralee wins with no effort at all.