Ralphie Parker is nine years old and lives in Hohman, Indiana, a generic small town in middle America. The film is narrated by his older self, remembering the adventures he had with his friends a few weeks before Christmas. He and his younger brother Peter are transfixed by the window display in a local store, and Ralphie identifies the only thing he really wants for Christmas - an Official Red Ryder, Carbine Action, Two-Hundred-Shot Range Model Air Rifle, with a compass and a sundial attachment in the top.
This is not the kind of gift Ralphie could ask his parents for outright, and so he embarks upon a hinting mission, hoping to subliminally plant the idea in their minds rather than requesting the rifle directly. He leaves advertisements for the rifle inside their newspaper and magazines at breakfast, but neither says a word, and Ralphie becomes so frustrated that he accidentally mentions his desired gift to his mother, who predictably refuses to discuss it because she thinks he will hurt himself. Ralphie is crushed, and pictures himself defending his family from a band of marauders with just his trusty rifle.
Ralphie always walks to school with a couple of his friends, Flick and Schwartz, who converse about life's important questions, such as what would happen if one of them licked a lampost and got their tongue frozen to it. The squabble escalates and Schwartz dares Flick to try. Flick is triple dog dared and cannot refuse, sticking his tongue out and licking the frozen post. It sticks tightly, and he starts to scream, but nobody is left to hear him as the school bell rings and all the other kids race into the classroom so that they won't get in trouble for being late. Miss Shields realizes that Flick is not there, and when she spots him out of the classroom window, calls the fire department and the police. Most of Flick's classmates are excited and enthralled, but Ralphie starts to feel bad for Flick. When Flick is freed from the lamppost, and comes back to class with a big bandage on his tongue, Miss Shields talks to the class about how the person who double dog dared Flick to do something so stupid should own up and atone for this wrongdoing. She then moves on to give out the day's assignment - an essay about what each child wants for Christmas. Ralphie writes about the rifle that he longs for, hoping that his paper will get back to his parents, and also hoping that Miss Shields will prove to be an adult who is on his side on the matter.
As the boys walk home, they encounter local bully Scut Farkus and his sidekick Grover. Schwartz is beaten up before the boys run away. Ralphie makes it home safely and manages to complete his assignment before his father gets home from work. Dinner is interrupted that night by a delivery at the front door; it is an upright lamp that is designed to look like a woman's stockinged leg, complete with a red stiletto shoe. Mr. Parker waxes lyrical about the lamp but his wife is uncomfortable about the item, and about her husband's obvious delight in it. She is horrified that he wants her to display it at the front window so that the entire neighborhood can see it. Her inclination is to do just the opposite.
At school the next day, Ralphie hands in his assignment, believing it to be an essay deserving of the top grade in the class.
That evening after school, Mrs. Parker "accidentally" breaks the stockinged leg lamp, which Ralphie's father believes she did on purpose. He attempts to fix the lamp but it is so poorly made that it continually breaks back in half, which entertains his wife enormously. He takes the lamp into the backyard and gives it a decent and fitting burial.
A few days later, the Parker family goes out to purchase a Christmas tree, but on the way home the car blows a tire. Mrs. Parker encourages Ralphie to help his father fix it. Always keen to emulate his father, Ralphie copies him by dropping an f-bomb when a hubcap is knocked out of his hands. Ralphie learns an important lesson; grown-ups are allowed to curse, but children are not. HIs mother washes his mouth out with soap and when his mother asks him where he learned the word, he is too scared to admit it was from his father, and instead throws Schwartz under the bus and gives up his name instead. This earns his friend a sound beating after his mother calls Schwartz's mother to complain about her son's vocabulary. Ralphie is sent to bed early and dreams about discovering years later that he has been irrevocably blinded by the soap in his mouth and watching his parents suffering with remorse.
Relphie gets his essay back the next day but sees a large C+ in the corner. He sees the phrase "you'll shoot your eye out" written across the top of the page, and believes that she has been got at by his mother who had told him exactly the same thing. His day is ruined and he spends it depressed and sulking. He will never get the rifle. He is bereft. He walks home from school on his own but is hit in the face by a snowball. He sees Scut and Grover coming over, mocking him for his snowballed face and for his eyeglasses. Ralphie starts to cry which of course makes the situation worse, but this makes Ralphie snap. He charges at Scut and tackles him to the ground, pounding him with his fists. Grover runs away and the kids in the neighborhood whom the pair have also bullied cheer Ralphie on. Randy picks up Ralphie's eyeglasses from the ground and runs home to tell their mother what is going on. She drags him home. She is unable to console him or calm him down and Randy hides in a closet because he is frightened of his father's reaction when he hears what has happened. Ralphie goes downstairs to face his father, dread in the pit of his stomach, but his mother is sympathetic and defends Ralphie to her husband, downplaying his role as the instigator of the fight and putting the incident down to defending himself against a bully. Ralphie feels that things might be looking up and decides that if he is ever to receive the BB gun he dreams of he needs to go directly to Santa Claus, and ask him for himself.
On Christmas Eve, the Parkers go to watch the Christmas parade downtown, and as soon as Santa goes by on his float his parents give in to his pleas and take the boys to the department store where Santa is waiting to greet the good children. Ralphie's parents tell him to take care of Randy, wait in the line to see Santa, and wait for them to come back from their shopping. However, when his turn comes, Ralphie finds himself intimidated by Santa, and when Santa suggests that he might like a football for Christmas, he nods his head in agreement. In the nick of time he remembers to tell Santa that what he really wants is a BB gun, but Santa is skeptical, and tells him that he will shoot his eye out. Their parents take the kids home where the family decorate the Christmas tree, and then the boys are quickly ushered off to bed.
On Christmas morning, Ralphie wakes up to see that it has snowed overnight. He goes downstairs with Randy who immediately calls dibs on the gifts that they see waiting for them. Presents are unwrapped, and Randy falls asleep whilst Ralphie sits on the couch between his parents. His father asks if he received everything that he wanted, and then points out a forgotten mystery package behind the desk. Ralphie unwraps it and finds his dreamed about Red Ryder BB gun. His father fills it with pellets, clearly delighted in the surprise they have pulled on their son. He tells his wife that he received the same kind of gun when he was eight years old, which is why he has chosen to give the same gift to their son. Ralphie takes the gun outside and sets it up but the pellet bounces off the target and hits him on the cheek, knocking off his glasses. Did he actually shoot his eye out as all of the grown-ups had predicted? As he realizes that he still has both of his eyes, he accidentally steps on his glasses and breaks them. He is worried about explaining this to his mother and decides to tell her that an icicle fell from the garage guttering and hit him in the face. She believes him and finds an old pair of glasses for him to wear.
That night Ralphie goes to sleep clutching his Red Ryder rifle as another child might hug a teddy bear, and he dreams about duck hunts and spectacular shot taking, because this is the best gift he has ever received.
