Directed by Jeremiah S. Chechik
Produced by John Hughes & Tom Jacobson
Written by John Hughes
Music by Angelo Badalamenti
Cinematography Thomas E. Ackerman
Edited by Jerry Greenberg & Michael A. Stevenson
Production company; Hughes Entertainment
Distributed by Warner Bros.
Release date; December 1, 1989
Running time; 97 minutes
With Christmas only a few weeks away, Chicago resident Clark W. Griswold, Jr. decides it is time to get a Christmas tree. He gathers his wife Ellen, daughter Audrey, and son Rusty and drives out to the country where he picks out a huge tree. Realizing too late that they didn't bring any tools to cut the tree down, they are forced to uproot it instead, before driving home with the tree strapped to the roof of their car. Once at home, Clark sets the tree into the living room and its long branches break through the windows.
Soon after, both Clark's and Ellen's parents arrive to spend Christmas, but their bickering quickly begins to annoy the family. Clark, however, maintains a positive attitude, determined to have a "fun old-fashioned family Christmas." He covers the house's entire exterior with 25,000 twinkle lights, which fail to work at first, as he has accidentally wired them through his garage's light switch. When they finally come on, they temporarily cause a citywide power shortage and create chaos for Clark's snobby neighbors, Todd and Margo. While standing on the front lawn admiring the lights, Clark is shocked to see Ellen's cousin Catherine and her husband Eddie, as they arrive unannounced with their children, Rocky and Ruby Sue, and their Rottweiler dog, Snots. Eddie later admits that they are living in the RV they drove, as he is broke and has been forced to sell his home. Clark offers to buy gifts for Eddie's kids so they can still enjoy Christmas.
Clark begins to wonder why his discourteous boss, Frank Shirley, has not given him his yearly bonus, which he desperately needs to replace an advance payment he has made to install a swimming pool. Later, Clark's Uncle Lewis and senile Aunt Bethany arrive and cause further chaos, including Lewis setting himself and Clark's tree on fire with a cigar and Bethany, when prompted to lead the family in saying grace, reciting the Pledge of Allegiance.
After a disastrous Christmas Eve dinner (complete with a dry turkey), Clark finally receives an envelope from a company messenger, who had overlooked it the day before. Instead of the presumed bonus, the envelope contains a free year's membership for the Jelly of the Month Club. This prompts Clark to go into a tirade about Frank, and out of anger, requests that he be delivered to the house so Clark can insult him to his face. Eddie takes the request literally, drives to Frank's mansion, and kidnaps him. In the meantime, Clark - having finally lost his nerve - cuts down his neighbor's tree to replace the burnt one, but a squirrel that was in the tree sets loose in the house with Snots chasing it and causing further damage; the chaos ends when both squirrel and dog exit the house and unintentionally attack a fed-up Margo.
After a consoling talk with his father, Clark calms down and makes up with the family by reciting "'Twas the Night Before Christmas". The story is interrupted when Eddie returns with Clark's boss, Frank. Clark confronts his boss about the cancellation of the employees' Christmas bonuses. Meanwhile, Frank's wife, Helen, calls the police, and a SWAT team storms the Griswold house and holds everyone at gunpoint. Frank decides not to press charges and explains the situation to his wife and the authorities, who scold him for his decision to scrap the bonuses, and decides to reinstate them (with Clark getting a bonus of last year's amount plus 20%).
The family head outside, with Rocky and Ruby Sue believing they see Santa Claus in the distance. Clark tells them it is the Christmas Star and that he finally realizes what the holiday means to him. Uncle Lewis says that the light is actually coming from the sewer treatment plant; suddenly remembering Eddie's sewage dumping from earlier, Clark tries to stop Lewis from lighting his cigar but cannot, as the spark from the match triggers an explosion. Aunt Bethany starts singing "The Star-Spangled Banner" and the whole family, Frank and Helen, and the SWAT team join in, gazing at Clark's Santa Claus and reindeer set burning and flying into the distance. Everyone then celebrates inside the house, Clark and Ellen share a kiss, and Clark remarking that he finally achieved having a fun old-fashioned family Christmas.