The film then switches into a lengthy memory-flashback, during the events of the first film after the Beast had saved Belle, Hubie and his friends from a vicious pack of wolves. Belle and Hubie are excited for Christmas but are shocked when the castle residents reveal that the Beast has forbidden Christmas from ever occurring. Belle finds the Beast outside in the snow and offers to teach him ice skating. Hubie and Marina join them, but the Beast furiously storms off when he crashes into the snow.
When Belle and Hubie plan to throw a Christmas celebration, Lumiere and Chip accompanying them along with the others to the castle attic where they meet Angelique, one of Lumiere's lovers who objects to the reintroduction of Christmas, due to the Beast's curse occurring on Christmas when he rejected the Enchantress entry into the castle. The Beast consults the court composer Forte the pipe organ. Unlike the other servants, Forte prefers to remain in his new form rather than being turned back into a human by Belle, enjoying his manipulation over the Beast's anger.
The Beast then confronts Belle and Hubie in the castle's boiler room, but they dissent over the occurrence of Christmas. Belle, Hubie and Rocko eventually meet Forte, who advises them to venture into the deepest part of the forest to cut down a giant Christmas tree. Belle, Hubie and Rocko then go to the forest and finds the tree is near impossible to cut down and eventually falls under a sheet of ice. The Beast learns what has happened from Forte and goes to rescue her where he catches up to Bonkers, Lumiere, Cogsworth, Forte's humble minion Fife, and a carpenter Axe. Marina and Fawn follow in hot pursuit. However, the Beast, knowing that Belle was planning Christmas against his wishes, imprisons Belle and Hubie in the dungeon.
Everyone visits Belle and Hubie after midnight, and Angelique apologizes for her rude attitude. The Beast finds a present, a storybook, from Belle and reads it. Moved by the book's words, the Beast has a change of heart and frees Belle and Hubie, offering to celebrate Christmas after all, much to everyone's delight.
In fear of losing his immortality by returning to human form should Belle and Beast truly and purely reciprocate love before the last petal falls (in reference to the original film), Forte is outraged and uses his music to destroy the castle in an attempt to kill both Belle and the Beast, ensuring that he and all will remain magically enchanted forever. The Beast confronts Forte, but is easily overwhelmed by his music. Fife (who's no longer loyal to Forte) points out that Forte's keyboard is his weak point, the Beast rips it off Forte and throws it. Pikatwo delivers a final thunderbolt which causes Forte to collapse and die. After Hubie and his friends forgive Fife for his wrong doings, they along with Belle, the Beast, and the servants celebrate Christmas together.
The film ends back in the present, with the Prince taking Belle aside and giving her a single red rose as a Christmas present, as Fife is now his new court composer and everyone celebrates Christmas as Marina kisses Hubie under the mistletoe.