It’s December 23rd and Paddy Moran, a homeless man living in Central Park, befriends an orphan named Billy who has come to New York in order to keep a promise made to his mother: to build the best snowman ever. Before they go to sleep that night, Paddy reveals to the penniless Billy that his hat is an heirloom worth a small fortune. When Paddy wakes up the next morning, he discovers both Billy and his hat are gone. He reports the theft to Officer Jones, who is more interested in locking Paddy up for vagrancy. A social worker, Dot Blackwell, intervenes. Dot is in New York looking for Billy, who has runaway from Florida. Paddy explains that a magic spell has been placed on the hat; every fifty years, on Christmas Eve, the owner of the hat is granted a “bit o’ magic and a wish.” This Christmas is the fiftieth year and Paddy wants to use the magic to get his estranged daughter back. Dot and Paddy agree to work together to find Billy and the hat. Meanwhile, Billy has tried to pawn the hat but to no avail. Suddenly it begins to snow. Billy builds a snowman and places the hat on its head, christening his new friend “Frosty.” Magically, Frosty comes to life and leads Billy on an adventure through the streets of New York. Officer Jones tries to arrest Frosty but Billy and Frosty elude him and run back into Central Park, where eventually Dot, Paddy, and Officer Jones catch up with them. Frosty agrees to give his hat back so Paddy can make his wish. At midnight Paddy wishes for a family and discovers that Billy is actually his grandson. They reunite and are able to bring Frosty back to life through the Christmas magic known as Love.