Act One

Harry Connick, Jr., appears in voice-over and encourages the kids in the audience to sit up, pay attention and get ready to get happy, because he is about to tell the story of The Happy Elf. The elf in question is named Eubie, and he is a good, happy and creative elf who loves Christmas more than anything. Next, Harry introduces the kids to Molly, who is a pretty bad kid. Her dad's a workaholic, her mom is just trying to hold it all together, and nobody gives Molly much attention or affection. She doesn't care about Christmas; she's been on the bad list for twelve years running and she's proud of that. Harry informs us that this quality is what will bring Molly and Eubie together, but they are skeptical.

The story begins the day before Christmas at Santa's workshop at the North Pole. Eubie and his friend, Hamm, are at work, and Eubie is singing. Just as Hamm is reminding Eubie that their supervisor, Norbert, hates music at work, Norbert bursts in and reprimands Eubie for singing. He tells the elves that they are on lockdown; there's no time for merriment. Gilda, another elf and friend of Eubie's, runs on, clutching her cell phone. She announces that they all have a Tree-mail from Santa. Santa is going to be picking three special elves to fly with him on Christmas Eve – a Sleigh Team – and he's picking these elves tonight. Gilda, Hamm and Eubie get excited that they could be the three elves on the Sleigh Team, but Norbert scoffs and tells them to get back to work.

Gilda sees a mischievous look on Eubie's face and reminds him to be good; she warns him that, if he loses his hat (a punishment for misbehavior), he won't be able to travel, talk to animals or go to elf karaoke. Eubie agrees, but he is so excited that he ends up leading the other elves in a massive song and dance that totally messes up toy production ("The Happy Elf"). Norbert returns to see the mess and is furious. He fires Eubie and he tells him that, if he pulls another stunt like this, he will take his hat. He tells everyone else to get back to work. Hamm and Gilda feel bad for Eubie, but he already has a crazy idea.

Eubie spies on Santa's Snow Board meeting that is being led by Norbert. The meeting begins with a pledge to please Santa. Then it is time for Santa (with a strong influence from Mrs. Claus) to pick the Sleigh Team ("The Pole Leaders"). Norbert expects to be chosen. He delivers Santa a night before Christmas status report; Santa decides that things are in good shape and he's going to have a cookie when Eubie crashes the meeting. Norbert can't believe it! Norbert tells Santa that Eubie is not supposed to be there because he fired him earlier. Eubie, however, wins over Santa by telling him how much he loves and respects him ("Santarrific"). Norbert is not pleased. Santa is getting ready to discuss Eubie's (positive) future, when Norbert interrupts: Eubie is late for work; Norbert has re-hired him, and assigned him to the Naughty and Nice Department. Santa tells Eubie that he better get back to work; the Naughty and Nice Department works the longest. Santa leaves. Eubie is crushed. Norbert is thrilled.

Eubie does the tedious work of going over the naughty and nice lists when he makes a discovery: all of the children in Bluesville, including Molly, are on the naughty list ("The Naughty Children of Bluesville"). Hamm and Gilda join him, and they all can't believe that there's a whole town with only naughty children. They begin to formulate a plan: if they can make it so that one child in Bluesville doesn't get a lump of coal in her stocking, then that will impress Santa, and they will surely make the Sleigh Team. Eubie decides that it's settled: they're going to find the naughtiest child in Bluesville and turn her nice before Christmas. However, making an unauthorized trip to Bluesville is a big risk, with severe penalties if they get caught. Gilda and Hamm are not ready to take the risk, but Eubie tells them that they don't have to come. This is his mission.

Harry introduces the kids to Bluesville, explaining that it is a dark, dismal and depressed town. Its only natural resource is coal. The Mayor and his wife, Gurt, reiterate this sentiment ("Bluesville"). Eubie arrives and is gobsmacked. The Mayor demands to know who he is, so Eubie explains. Eubie knows that Christmas can perk up this sad town of theirs, but the Mayor replies that the town isn't sad; it's mad... because all they do is work and worry about work. The Mayor's entire life is consumed with trying to figure out what to do with all of the coal in town. Eubie suggests that they burn it, but this coal doesn't burn; it just sits in a lump. The only thing it is good for is throwing.

Just then, the Mayor and Gurt's daughter, Molly, arrives. Eubie is excited to meet her, as she is the one he hopes to convert to the nice list this Christmas. Molly is not impressed and is quite upset that Eubie has brought up Christmas, which she hates. Her friend, Curtis, has the same mindset. Mid-argument about whether Eubie can turn them nice, an angry lady announces that it is sunrise. Everyone stops and soaks in the daily 23 seconds of sun. For this brief moment, everyone in Bluesville is nice and happy. Then, the sun sets, and they go back to their grumpy selves. Eubie makes a deal with Molly that he will try to convince her to like Christmas and, if he fails, she will get to throw things at him.

Molly takes Eubie on a tour of Bluesville to show him just how bad it is. Their first stop is the world's one and only question mark-making factory. It's a bad job, but someone has to do it ("The What Song"). Eubie posits that question marks are good for finding out answers to questions, but Curtis explains that they never get the answers in Bluesville, which makes them mad and bad. Despite the desperation of the situation, Eubie suspects that there might be something good underneath all the bad in Bluesville.

Next, Molly takes Eubie to Gurt's music shop. Eubie is very excited about a music shop, but Gurt explains it is hard to find people to play music in Bluesville. She misses her old life in another town before they came to Bluesville ("The Poop Hole Song"). She breaks down crying, and Curtis and Molly tell Eubie that he is only making things worse. Can't he see that Christmas can't survive in Bluesville? They are about to make him leave when Eubie asks Curtis if there is anything that makes Molly happy. Curtis reveals that Molly likes candy. Eubie describes Christmas in wonderful candy terms and gets Molly laughing and smiling ("Two Scoops of Christmas").

Molly is still suspicious of Eubie, though: nobody cares about Bluesville... so why does he? Eubie explains that humanity is like strings of Christmas lights: if one goes out, everyone is dark. To her surprise, his statement genuinely moves Molly. Eubie gives Molly his elf hat, which is what holds all of his magic – he thinks she needs it more than he does. However, an elf cannot just give away his hat. He is suddenly warped back to the North Pole, where Norbert is waiting. Norbert explains that the worst offense an elf can do is give away his hat and he puts Eubie on Gingerbread House Arrest ("That Magic Hat").

Act Two

Eubie is lamenting his fate when Gilda and Hamm appear to rescue him. Gilda has stolen Norbert's hat so that Eubie can go back to Bluesville and finish what he started. Eubie, though, has lost his elf-esteem; he doesn't believe he can help. Gilda explains that's why she and Hamm are going with him: together, the three of them can do anything ("Three").

Meanwhile, back in Bluesville, Molly is despondent. Things have gotten worse now that she has seen what she could have had... but has lost, because of Eubie's disappearance. Just then, Eubie, Gilda and Hamm arrive. Eubie gets straight to business; they have one day to prove to Santa that Bluesville deserves Christmas. The plan is that Molly will take Hamm to the factory so he can do his mechanic thing, Gilda and Curtis will go to the cliffs with Windex and hand sanitizer and, finally, Eubie is going to get a tree. Together, they will turn things around for Bluesville ("Operation Yule Tide Turning").

In another part of Bluesville, Norbert and Coppa arrive, ready to grab Eubie and Norbert's hat before Santa finds out. Hamm tells Molly who Norbert and Coppa are, and she vows to protect her friends, which she begrudgingly admits the elves are. Norbert catches Eubie with the tree and tries to arrest him. Molly distracts Norbert so that Eubie can get away. During an elaborate chase scene, Eubie, Gilda and Hamm work the rest of their elf magic on Bluesville, making it ready for Christmas. Now, all they need is Santa.

The clock strikes midnight (when official toy delivery begins), but nothing happens; Molly is devastated. She believes that Eubie and the elves have tricked her, and she says that they were just using her so they could get on the Sleigh Team. Eubie agrees. He realizes Santa hasn't come because of him. Eubie came to Bluesville to prove something about himself to Santa, not to prove something about the town... and that's not the true Christmas spirit. He reminds Molly how wonderful Christmas is and insists that she has the Christmas spirit based on her actions in helping him ("Christmas Day"). Eubie gives her back his hat... and also a lump of coal, explaining that "You never know what you may find on the inside."

Frustrated, Molly smashes the coal on the floor and, to her surprise, it breaks away to reveal a shining diamond! Excited, Molly calls Curtis and all of the citizens of Bluesville. She explains that Eubie showed her how everyone has goodness inside of them, and that lesson has come true with the coal. They will all be rich now because, if they smash the coal, they will find diamonds inside, too. She tells her father that, even if he doesn't care about her, he should care about that. The Mayor is shocked – she is worth more to him than all the diamonds in the world. In order to make up for leading her to believe anything else, he promises to help bring Christmas to Bluesville.

As a result of the Mayor's and the elves' actions, Bluesville starts to change. The What Factory starts manufacturing exclamation points instead of question marks and becomes the Wow Factory ("The Wow Song"). In the Bluesville town square, the Mayor and Gurt officially welcome Christmas to Bluesville ("What a Night!") Eubie, Gilda and Hamm enter with jingle bells and start having a snowball fight with Molly. Suddenly, they look to the sky and see a sleigh with eight reindeer. Santa has arrived!

Norbert rushes to Santa to try to tell the story in a way that most favors him, but Curtis and Molly tell Santa the truth about Norbert's attempts to ruin their Christmas. Eubie tells him that's not the Christmas spirit. Santa agrees that Norbert has been naughty this year and assigns him to the job of reindeer pooper-scooper. He then asks Eubie, Gilda and Hamm to hand out toys, which they do, much to everyone's delight.

Santa names Eubie, Hamm and Gilda to the Sleigh Team, and Molly convinces Eubie to kiss Gilda, his new girlfriend. Molly and Eubie agree that, rather than saying goodbye, they will just see each other next year. Curtis notices that the sun is rising and not setting right away. The residents of Bluesville are shocked. Gilda explains that it was Eubie's idea: they cleared the coal off of the mountains and, underneath, were shiny, Bluesville diamonds. Santa and the sleigh team take off as everyone wishes one other a Merry Christmas. Harry reminds the kids in the audience that they should be good to everyone, be nice to elves and let their best selves shine ("The Happy Elf – Reprise").