Pee-Wee and his Playhouse friends celebrate the Christmas holiday with many guests. Pee-Wee wishes from Jambi that the Playhouse is decorated for Christmas. At the time Cher visits, Pee-Wee displays the secret word, which is year. Pee-wee plays in the snow and ice skates with Little Richard. He builds a snowman, which talks. Pee-wee connects-the-dots to a sled, and rides with Magic Screen's cousin Magic Johnson. Pee-Wee learns different holiday traditions such as breaking the pinata and Hanukkah from Mrs. Rene. After receiving one too many fruitcakes from his friends, Pee-wee shows his friends a new room made of fruitcakes. Randy unplugs the Christmas lights and is suddenly taught the True Meaning of Christmas. Everyone sings various Christmas carols until Santa arrives. Pee-Wee gets an extra wish from Jambi since it's Christmas day. He wishes that everyone including the viewers would have the merriest Christmas of all, and a Happy New Year!
- Aaron Fletcher as Santa Claus
- UCLA Men's Glee Club as Marine Choir
- Frankie Avalon
- Del Rubio Triplets
- Annette Funicello
- Zsa Zsa Gabor
- Whoppi Goldberg
- Magic Johnson
- Grace Jones
- K.D. Lang
- Little Richard
- Joan Rivers
- Dinah Shore
- Oprah Winfrey
- This was a one hour special.
- This special was divided into two shows, and several parts were cut, during Fox Family airings.
- Magic Screen and Magic Johnson are cousins.
- Grace Jones sings "Little Drummer Boy."
- Pee-wee has Frankie and Annette make Christmas cards.
- Annette starts the cartoon.
- The secret word is displayed in the middle of the episode.
- Cher responds to the secret word instructions by screaming.
- Del Rubio Triplets sing "Winter Wonderland."
- k.d. lang sings "Jingle Bell Rock."
- Dinah Shore sings "12 Days (or so) of Christmas."
- Charo sings "Feliz Navidad."
- Pee Wee & his friends sing "Pee-Wee's Christmas Medley":
- Jingle Bells
- It Came Upon The Midnight Clear
- Deck The Halls
- O Come All Ye Faithful
- Winter Wonderland
- Pee-Wee gets lots of Fruit Cakes.
- Mrs. Rene and the Dinosaur Family are Jewish.
- This is the only episode where Pee-Wee doesn't ride the scooter eject at the end. Instead he helps Santa deliver presents. The credits show Pee-wee and Santa riding the sleigh.
- Dinah Shore is still on the phone at the end.
- Fourth Wall (and Camera Lens) Broken: Pee-wee breaks the camera with his yo-yo. He asks Conky too put a new camera on the list.
- Out of all characters, Globey is the only character in the special without a speaking role.
- Secret word: "year".
- Connect-the-dots: sleigh (w/ Magic Johnson).
- Snack: hot chocolate.
- First Wish: Playhouse was decorated.
- Second wish: Everyone would have a Merry Christmas and a Happy New Year.