SILENT NIGHT, DEADLY NIGHT

On Christmas Eve 1971, five-year-old Billy Chapman and his family visit a nursing home in Utah where his catatonic grandfather lives. When Billy's parents Jim and Ellie leave the room, his grandfather suddenly awakens and tells Billy to fear Santa Claus, as he punishes the naughty.

On the way back home, a criminal dressed in a Santa suit—who had just robbed a liquor store and killed the owner Mr. Levitt—attempts to carjack the family. As Jim tries to drive away, the criminal shoots him dead and attempts to sexually assault Ellie; when she hits him, he slits her throat with a switchblade. Billy flees and hides, leaving his baby brother Ricky in the car.

Three years later, in December 1974, eight-year-old Billy and four-year-old Ricky are celebrating Christmas in an orphanage run by Mother Superior, a strict disciplinarian who beats children who misbehave and considers punishment to be a "good" thing. Sister Margaret, who sympathizes with the children, tries to help Billy, but he is regularly punished. On Christmas, the orphanage invites a man in a Santa Claus suit to visit the children; Billy, forced to sit on his lap by Mother Superior, punches the man before fleeing to his room in horror.

Ten years later, in the spring of 1984, Billy, now eighteen, leaves the orphanage and obtains a job as a stock boy at a local toy store, with support from Sister Margaret. At the store, he develops a crush on his co-worker Pamela; he has sexual thoughts which are often interrupted by morbid visions of his parents' murders. On Christmas Eve, the employee who plays the store's Santa Claus is injured and Billy's boss Mr. Sims makes him take his place. After the store closes, the staff has a Christmas Eve party. Billy, still in a Santa Claus suit, tries to have a good time, but is troubled by memories of his parents' murders, causing him to feel depressed. He watches as his co-workers Andy and Pamela kiss and depart to the stock room. Billy follows them and witnesses Andy attempting to rape Pamela. This triggers his insanity; Billy strangles Andy with a string of Christmas lights and, declaring that punishment is "good", murders Pamela with a box cutter.

Next, Billy murders Mr. Sims and his manager, Mrs. Helen Randall. Sister Margaret discovers the carnage and goes to the police station to seek help. Billy breaks into a nearby house where a young couple named Denise and Tommy are having sex and a little girl named Cindy is sleeping; he impales Denise on a set of deer antlers and throws Tommy through a window. When this awakens Cindy, Billy asks if she has been nice or naughty; she says nice, and he gives her the box cutter he had used earlier. After this, he witnesses bullies Bob and Mac picking on Doug and Jim, two teenage boys and stealing their sleds, and decapitates Mac with his axe.

The next morning, Captain Richards and Sister Margaret deduce Billy will go to the orphanage, where Ricky is still living. Officer Barnes responds to orders to secure the orphanage and kills a pastor, Father O'Brien, who was dressed in a Santa outfit, mistaking him for Billy. As Barnes continues patrolling the area, he is struck in the chest by Billy's axe. Billy confronts Mother Superior, now in a wheelchair. Just as he prepares to kill her, Richards shoots him in the back. Billy drops to the floor and tells the children, "You're safe now, Santa Claus is gone", before dying from his injuries. A fourteen-year-old Ricky, scowling at Mother Superior, utters, "Naughty."

Billy's killing spree as a Santa-clad murderer culminates with him being shot and killed at the orphanage, right in front of his younger brother Ricky.

The ending closes Billy's tragic arc, underscoring how his untreated trauma and brutal upbringing led to his downfall. The final moments suggest a cyclical nature to the violence, hinting that Ricky may be haunted—or influenced—by the same darkness, casting a shadow over the film's final note.