The story begins at Olive's house on Christmas Eve, where Popeye's nephews are spending the night. While Popeye and Olive trim the Christmas tree, Bluto happens by and grouses that "that rat Popeye got here ahead of me!" Spying a sack of toys and a Santa costume just inside of an open window, the unscrupulous rapscallion has a sudden brainstorm involving one of his many disguises. He absconds with the costume and prop and reappears seconds later on the roof in full red-and-white regalia, shouting, "Ho! Ho! Ho! Merry Christmas!!"
As an opening salvo that sets the tone for what is to come, the ruffian lifts up the entire brick chimney top and sends it cascading down on Popeye's head. Sliding down what is left of the chimney, he soon has his arms locked around Olive and booms, "Merry Christmas, babe...er, ah, miss..." By insinuating himself into the proceedings, Popeye ends up on the receiving end of a passionate kiss that had been intended for Olive. Bluto flings Popeye out a window tied up in the sack of toys while he recites poetry to Olive-- which Popeye interrupts yet again. Bluto attempts to electrocute him with an electric train set while he and Olive light the candles on the tree, hand-in-hand. "Ah, my dear, too bad Christmas comes but once a year," the big man purrs. Olive bats her eyelashes and gushes, "Drop in any time at all, Santa!"
Once again Popeye interrupts and asks to help light the tree. Bluto tasks him with lighting the large candle at the top, which happens to be a stick of dynamite. As Popeye proffers another heartfelt season's greeting, the explosive detonates, catapulting him out through the roof and into a distant pond of water, which freezes on impact into a mushroom shape with the sailor imprisoned inside. Bluto lets out a devilish guffaw at this turn of events while Olive stands horrified. At this precise moment, one of the lit candles ignites Bluto's Santa beard, exposing his black facial hair underneath and allowing Olive to see through the ruse.
"Why, you're not Santa Claus; you're Bluto!!" Olive shrieks. "You're so right, Olive. How's about a kiss?" the crazed sex fiend replies. Olive attempts to flee on a tricycle with Bluto in hot pursuit, rounding the walls in the manner of stunt motorcyclists of the day in a gag that was repeated from The Island Fling and All's Fair at the Fair. Olive's panicked cries reach Popeye's ears, and he puts his pipe to use as a blowtorch and frees himself. Grabbing a can of spinach from the toy sack (it had been intended as a gift for the nephews), Popeye scarfs down his salvation substance and smashes "Santa." The stars that surround the senseless schemer's head escape to form a wondrous garland around the Christmas tree.
In the final scene, Popeye dons the Santa suit himself and calls out to waken the children. They spring into action, pawing through the toy sack, never fooled for a second by the disguise.
- Despite the apparently freezing cold temperatures out-of-doors, Olive has left a window wide open to the frigid night air
- Although Bluto's lament makes it appear that Popeye has secured a date with Olive merely by virtue of his earlier arrival, the nephews do seem to have permanent lodging in Olive's residence
- Bluto's Santa beard incinerates in its entirety while his real beard appears to be completely noncombustible
- The events of the cartoon transpire over the space of five minutes, yet the nephews appear to have gotten a full night's sleep before awakening on Christmas morning
- Mister and Mistletoe at the Internet Movie Database