It's Christmas at Arkham Asylum, and all of the sociopaths are decorating and singing Christmas carols. The Joker is in the middle of the asylum choir, and naturally changes the words to "Jingle Bells"((singing) Jingle Bells, Batman smells. Robin laid an egg. The batmobile lost a wheel and the Joker got away! Crashing through the roof, in a one-horse open tree. Busting out I go, laughing all the whee! Ha Ha Ha Ha Ha!
)before making his escape on a rocket-powered Christmas tree. Meanwhile, back at the Batcave, Robin tries to convince Batman to kick back and relax as there's no need for them to go out on Christmas. Batman believes otherwise since Joker has escaped. Robin makes a deal with Batman: if they go out on patrol and find no sign of the Joker, then they'll return home and watch It's a Wonderful Life. Batman agrees and the duo heads out. All seems quiet in Gotham for a change and Robin is convinced they aren't needed. Batman is his usual self: seeing a man running after a rich old woman and believing that she's going to be robbed, he heads out after them. However, the man calls to the woman and tells her that she dropped a package a couple of blocks back and returns it to her the lady thanks him & gives him a kiss on the cheek. Robin asks to go home and Batman silently swings off. "He could give lessons to Scrooge." The dynamic duo returns to Wayne Manor for dinner and Batman finally relents and decides to give It's a Wonderful Life a try. As they settle in for the movie, However, they discover that It's a Wonderful Life isn't on. Instead they find that Joker has hijacked the television waves and has a "Special" for Batman. Joker shows a tank with a giant Santa Claus on top crashing through the city. The show is announced to be "Christmas with the Joker." Batman and Robin instantly work to find the Joker's location by checking power surges and head out to find him. Joker mentions that since he doesn't have a family of his own to spend Christmas with, he's stolen one: The Lawful Family, consisting of Gordon, Summer Gleeson, and Detective Bullock. Joker tells Batman that he can have them if he can find them by midnight. If he fails, they will die. However, before Batman and Robin can reach him, Joker reveals "Laughy" his own Christmas Elf. Laughy and Joker explain that they will blow up a rail bridge just in time for the 11:30 train to arrive. Summer becomes agitated and explains that her mother is on that train. The Batmobile pulls up alongside the train and Batman and Robin split up so Robin can uncouple the passenger cars and Batman can find the engineer. Robin manages to stop the cars with ease, and Batman crawls up to the engine, grabs the engine and dives off the train to safety. The train continues off the bridge and blows up in the valley. In retaliation for his latest prank being sent awry, Joker blows up his studio audience which are cardborad. Batman and Robin return to the Batmobile, where Batman reveals that he's isolated the Joker's broadcast signal, and that it's coming from Mount Gotham. They race towards the observatory and find a present by the radar antenna. Batman suspects a trap, and sure enough the present bursts open to reveal a Joker-style jack-in-the-box. While the duo is distracted by more of Joker's threats, the observatory telescope reveals itself to be a giant cannon and zeros in on Batman and Robin. They take off running as the cannon begins to fire, and the Joker cuts to a commercial.
We resume to find Batman and Robin still evading the cannon. This time they split up, with Robin heading inside the observatory. Batman causes the cannon to fire on the radar antenna, and Joker sends the cannon out of control, firing on Gotham City. Robin enters the observatory and finds a line of Joker dolls with machine-guns as hands. Robin rolls out of the way from the gunfire and dodges behind a pillar. Batman tells him to do "Operation Cause and Effect," which seems to consist of throwing a grenade at the cannon's control panel. Robin rejoins Batman outside of the observatory, and Batman admits he doesn't know what to do next. Back on Joker's show, Joker brings Summer over to open up her Christmas present. She opens it and pulls out a Betty Blooper doll. Joker reveals that the doll is going to be wound up and set loose on Gotham City, but this time he's overplayed his hand. Batman realizes that Betty Blooper dolls haven't been made since the Laffco Toy Factory shut down 10 years ago. They head to the abandoned factory. Joker's been waiting for them, however, and he starts "Dance of the Sugar Plum Fairies" blasting through the factory's loudspeakers and then automates three giant Nutcracker robots to attack Batman and Robin. The team quickly takes them out, Just then, the song switches to "the Russian Dance" and toy planes fly after the duo. Batman grabs up a baseball bat and smashes most of them while Robin catches the rest in an oil barrel. Just as the planes are finished off, but Donner and Blitzen show up on the catwalk to start shooting down at them. Batman and Robin evade their fire and duck behind a pile of teddy bears. The henchmen open fire on Batman's cape, but after they stop firing they realize they've been shooting one of the large bears and it falls off the catwalk,pinning them to the ground. With Joker's men and traps down, the duo sets out to find him but he reveals himself. along with his "Lawful" family, bound and gagged and hung over a vat of molten plastic He's poised to cut the rope, unless if Batman doesn't come and get his Christmas present. Expecting a trap, Batman takes the present and opens it to discover a spring-loaded pie inside. Joker has a laugh Batman wipes the pie loose and races after Joker, who cuts the rope. Batman jumps on top of the vat and catches the prisoners, then turns them over to Robin. He catches up with Joker, who escapes because Batman grabbed onto a pair of fake arms inside Joker's jacket. Joker races on to the catwalk and trips on a skate, narrowly falling into his own vat. Fortunately for him, Batman saves him and bids him a Merry Christmas. Joker simply says, "Bah humbug!" Back at Wayne Manor, Batman and Robin finish watching It's a Wonderful Life, and we see that Joker is back in his cell at Arkham.