A Charlie Brown Christmas is the first segment of Happiness is the 1960s, Charlie Brown!.
Most of the Peanuts characters are skating on a frozen pond as the song "Christmas Time is Here" plays. On his way to join them, Charlie Brown confides in Linus that even though the holidays are approaching he is starting to feel depressed despite all the presents and cards and tree decorating. His depression and aggravation only get exacerbated by the goings-on in the neighborhood. Though his mailbox is empty of Christmas cards, he tries sarcastically to thank Violet for the card she "sent" him, though Violet knows she did no such thing. Charlie Brown (shouting after Violet as she walks away): "Don't you know sarcasm when you hear it?!?"
Ultimately Charlie Brown visits Lucy in her psychiatric booth. On her advice, he gets involved in directing a Christmas Nativity play. She also sympathizes with Charlie Brown about holiday depression, always getting "a lot of stupid toys" instead of what she really wants; real estate. On the way to the theater, Charlie Brown is drawn to Snoopy, who is frantically and gleefully busy decorating his doghouse. Demanding an explanation, Snoopy hands Charlie Brown a flyer about a neighborhood Christmas lights and display contest. Charlie Brown walks away in frustration at his own dog having being bitten by the Christmas commercialization bug. He then gets accosted by Sally, who wants Charlie Brown to dictate a letter to Santa. Sally ultimately asks Santa to "just send money," particularly tens and twenties, causing Charlie Brown to run away in exasperation of even his sister's secularization.
Charlie Brown arrives at the rehearsals, but try as he might, he cannot seem to get control of the situation. The uncooperative children are more interested in modernizing the play with dancing and lively music. Charlie Brown, on the other hand, is determined to not let the play become secularized by focusing on the traditional side of the story.
Thinking the play requires "the proper mood," Charlie Brown decides they need a Christmas tree. So Lucy takes over the crowd and dispatches Charlie Brown to get a "big, shiny aluminum tree... maybe painted pink." With Linus in tow, Charlie Brown sets off on his quest. But when they get to the tree market, Charlie Brown zeroes in on a small baby tree which, ironically as well as symbolically, is the only real tree on the lot. Linus is reluctant about Charlie Brown's decision, but Charlie Brown is convinced that decorating it will be just right for the play. They return to the auditorium with the tree, only to be verbally castigated by everyone, especially Lucy, about the choice of tree. Second guessing himself, Charlie Brown begins to wonder if he really knows what Christmas is about, loudly asking in despair. Linus quietly says he can tell him, and walks to center stage to make his point. Under a spotlight, Linus quotes the second chapter of the Gospel of Luke, verses 8 through 14 from the King James Bible, in which angels from heaven tell a group of initially frightened shepherds of the birth of the baby Jesus, and instruct them as to where they can "find the babe." Charlie Brown now realizes he does not have to let commercialism ruin his Christmas. With a newly-found sense of inspiration, he quietly picks up the little tree and walks out of the auditorium, intending to take the tree home to decorate and show the others it will work in the play. On the way, he stops at Snoopy's decorated doghouse, which now sports a first prize blue ribbon for winning the display contest. Letting his dog's commercialism roll off his back, Charlie Brown takes an ornament off the doghouse and hangs it on his tree, but the ornament's weight is too much for the small branch and pulls it to the ground much to Charlie Brown's shock.
Charlie Brown, seeing the ornamented branch droop to the ground, screams, "I've killed it. AUGHH!! Everything I touch gets ruined!" and walks away without taking the ornament off, his head hanging in shame. Unbeknownst to Charlie Brown, the rest of the gang, having also heard Linus' recitative, began to realize they were a little too rough on Charlie Brown and quietly followed him from the auditorium. Linus goes up to the little tree and gently props the drooping branch back to its upright position, ornament and all: Linus says, "I never thought it was such a bad little tree," he wraps his blanket around the base of the trunk and adds, "It's not bad at all, really. Maybe it just needs a little love." The rest of the children grab the other decorations off of Snoopy's doghouse and add them to the tree. When they have finished, even Lucy concedes to Charlie Brown's choice, saying, Charlie Brown is a blockhead, but he did get a nice tree." The children then start humming the traditional Christmas Carol, "Hark! The Herald Angels Sing." When Charlie Brown returns, he demands to know what is taking place. When he sees what they have done with the tree, he cannot believe his eyes,and all the children shout, "MERRY CHRISTMAS, CHARLIE BROWN!" At this point, the children, now with Charlie Brown, begin singing "Hark! The Herald Angels Sing" as the end credits roll and the snow begins to fall.