It is three days before Christmas. Grace, almost 18, works in a toy store owned by her grumpy aunt Charlotte, who adopted her after her parents, who owned the store, died. Charlotte reminds Grace that when Grace turns 18 in three days, Grace will inherit the store. Grace doesn’t want to own the store; she wants to leave Sheboygan, Wisconsin and do something important. Nikki, a quirky, Christmas-loving woman also works there. Grace’s parents had inspired her with the wonders of astronomy, with those guiding stars out in the universe. In fact, they hung a mobile of stars over her crib. Even now, Grace wears the star Polaris on a neck chain. The store is featuring the hottest new action figure—Cassiopeia – Queen of the Northern Sky. All the children want it and all the parents are fighting to buy one before Christmas. Grace practically runs the store but doesn’t fit in. She is deeply interested in astronomy and yearns to go in search of adventure. She begs for a chance to go far away and do something important.

Suddenly, a swirl of lights transport Grace and Nikki to the legendary Land of Forgotten Toys. They meet Cassiopeia – Queen of the Northern Sky—leader of the Land of Forgotten Toys, and various toys. They discover that Santa has been kidnapped by his evil sister Charlotta, and that, in answer to Grace’s plea, she has been chosen to save him. Grace finds all this hard to believe, but she admits that the universe is full of surprises and that she did truly want an adventure. So she agrees to help.

Meanwhile, Charlotta broods in her cabin with her henchmen elves and a kidnapped Santa. Incredulous, Santa inquires why Charlotta has done such a thing. Charlotta tells him that she’s got a new idea for Christmas: one where the little boys and girls of the world will pay her for their presents. Additionally, in order to ensure no one ruins her plans, she is going to freeze Santa using the Shiverlator 5000, a powerful freezing ray unknowingly created by Schmedrick the elf. When Charlotta discovers that Grace and Nikki have arrived in the Land of Forgotten Toys and may thwart her plans, she sends Schmedrick to lead them into the Ginger Root Forest: home of the dreaded Icicle Monster.

In the forest, Grace, Nikki, and Schmedrick encounter the Icicle Giant, and through some quick thinking, get away unscathed. While Grace goes to look for more clues, Nikki pep-talks a distressed Schmedrick, eventually discovering that they might have more in common than they think. Grace discovers that Schmedrick has been carrying some Holly Berry Cookies, which brought the Icicle Giant to them. Schmedrick, scared, runs into the woods.

Meanwhile, the toys dream of a place where they can be accepted and loved for who they are. The Queen of the Northern Sky comes to them and alerts them that Grace and Nikki need their help. Using all of their quirks, they are able to create an iceberg to sail to the rescue.

Grace and Nikki, lost in the woods trying to find Santa, start to give up hope. After Grace is visited by her childhood toy mobile embodying the spirit of her parents, she regains the courage to keep on. She knows where to find Santa, and how to save Christmas.

Grace, Nikki, Schmedrick, and The Toys all converge on Charlotta’s cabin. Using the necklace around her neck, Grace eventually leads them all in saving Santa. They discover that the toys are not misfits; in fact their “flaws” are key to their success. And Grace discovers that she, too, really does fit in. Santa is freed. He confronts Charlotta but graciously grants her another chance. Then, Queen of the Northern Sky gives Grace the mobile to take along with her.

Grace returns to the toy store. She reaches out gracefully to Charlotte and offers her the mobile that she was just given. Charlotte is completely blown away by this and is flooded by memories of Grace’s deceased parents. Charlotte admits that she has been hard on Grace and offers to stay so Grace can leave. But now, Grace sees a new possibility: a shop with toys for every kind of child! For, while we are all different, none of us are really misfits. And even in the darkest galaxies, there is always light!