Having already lampooned A Christmas Carol, the Muppets turn to the movies for this seasonal comedy. With Joan Cusack threatening to close the Muppet Theatre, Kermit assumes the James Stewart role in It's a Wonderful Life and angel David Arquette shows him how life would have treated the likes of Fozzie and Miss Piggy had he never existed. The absence of most of the usual voice artists and the inclusion of some smutty innuendo compound this haphazard parody's overall mediocrity. But the cameos by Whoopi Goldberg, William H Macy and Matthew Lillard are amusing, as is the production of "Moulin Scrooge".

The owner of a bank (Miss Bitterman) wants to own the Muppet Theatre so she can build a nightclub over it. After she tricks Pepe into giving her the only copy of the contract between her father and the Muppets, she changes it so the Muppets have very little time to pay a debt they owe. Meanwhile, the Muppets are trying to put on a Christmas show. After the Muppets are confronted by Bitterman, they make a lot of sacrifices to save up so they can keep the Theatre.