London, Christmas Eve, the 1840s. Money-lender Ebenezer Scrooge despises Christmas and doesn't hesitate to let the world know about it: he refuses to show seasonal charity to debtor Samuel Wilkins, shoos away carol singers and rubbishes the thought that he might contribute to a fund for the poor and destitute. His nephew Fred pays him a visit, and is rebuked for marrying against Scrooge's wishes to a girl from a penniless family. Scrooge grudgingly allows his clerk Bob Cratchit to take the day off on Christmas Day to spend time with his family (including his disabled son Tiny Tim), but this is his sole concession.

Returning home, Scrooge hears sinister noises. He is visited by the ghost of his former business partner Jacob Marley, who informs him that thanks to his life's misdeeds, he is compelled to walk the earth for ever, able to see things but unable to interact with them. He informs Scrooge that he will be visited by three further spirits, and advises him to listen to what they have to say. Scrooge retreats to his bed and hides under the quilt.

At one o'clock, Scrooge is visited by the Spirit of Christmas Past. He shows Scrooge aspects of his past life: the way he was shunned by his classmates at school, and only his sister Fan showed him any love. But she died in childbirth (producing Fred). Scrooge is apprenticed to the Fezziwigs as a clerk. A kind and jovial employer, he made sure his staff wanted for nothing. Scrooge proposed to Alice, successfully wearing down her protestations. But Fezziwig's business fails, and is bought up by businessman Mr Jorkins, who takes a shine to Scrooge and persuades him to defect. Now on twice the salary, Scrooge becomes obsessed with money, rationalising this by telling himself that in a harsh world, he needs something to cushion himself. Though a disgusted Alice breaks off the engagement, Scrooge goes from strength to strength, eventually teaming up with fellow clerk Jacob Marley to buy Jorkins out after he's caught embezzling company funds. When Marley dies, he urged Scrooge on his deathbed to save himself from his fate.

Scrooge tosses and turns in bed. He hears a sound in the next room and finds the Spirit of Christmas Present there, large-bearded and cackling. He shows Scrooge the Cratchit family on Christmas day, drinking a toast to Scrooge despite his miserly ways. Fred drinks Scrooge a toast too, despite his uncle cutting him off without a penny. Alice is seen working in the poorhouse, with an elderly woman telling her that this was the happiest Christmas of her life. Finally, the ghost opens his robe to reveal two huddled children, representing Ignorance and Want.

A terrified Scrooge runs into the street and encounters the Spirit of Christmas Yet to Come. Silently, he shows Scrooge the Cratchit family recovering from Tiny Tim's death, while Scrooge's posthumous possessions are picked over by the laundress and the undertaker. Finally, Scrooge is shown his own grave, and collapses on top of it.

Panic-stricken, Scrooge wakes up. His housemaid Mrs Dilber informs him that it is Christmas Day: all the ghostly encounters happened overnight. An elated Scrooge gives her a guinea and raises her salary, then summons a boy to purchase a large turkey and send it to the Cratchits anonymously. He then goes to see Fred and is welcomed into his home. The next day, Cratchit arrives late, and Scrooge makes as if to admonish him - but instead he raises his salary. Now thoroughly reformed, Scrooge admits that he has never been so happy.