While South Park Elementary attempts to stage the most non-offensive, non-denominational holiday play, Kyle tries to make people believe in Mr. Hankey.
The South Park kids are rehearsing their Christmas play. Rehearsal is interrupted when Kyle's mom Sheila shows up, furious at the show's overt Christian themes and that her son, a Jew, is playing Joseph. When asked if there is something non-denominational he can do for the play, Kyle offers to sing "The Mr. Hankey Song". Kyle explains Mr. Hankey is a turd that comes out of the toilet during Christmas to give presents to those with high fiber diets.
At a town meeting, various factions complain about various aspects of the school's production. The mayor buckles and promises to stage "the most non-offensive Christmas ever to any religious or minority group of any kind."
That evening, Kyle is instructed by his parents to stop talking about Mr. Hankey. He agrees, but as he brushes his teeth a turd wearing a Christmas hat leaps out of the toilet. Mr. Hankey sings a jolly holiday song and leaves feces wherever he lands. Kyle grabs him in mid-flight, just as his parents burst in. All they see is a room covered in poop smears, with their son clutching a hand full of feces.
To prove to his friends Mr. Hankey exists, Kyle puts Mr. Hankey in a box and takes him to school. Mr. Garrison, at a loss, asks the kids if they know any non-denominational, non-offensive holiday songs. Cartman recommends they sing "Kyle's Mom Is A Stupid Bitch" in D-minor. Offended, Mr. Hankey leaps out of his box and hurls himself at Cartman. This lands Kyle in the school counselor Mr. Mackey's office. Mr. Hankey decides to take a bath in Mackey's cup of coffee, earning Kyle a ticket to the South Park Mental House.
That evening the kids put on their new play, now called the South Park Elementary Holiday Experience. Music and lyrics are provided by minimalist composer Phillip Glass. The show is terrible, and a full-scale riot breaks out in the audience.
In the midst of it, Chef asks what happened to Kyle. The boys tell him about his obsession with Mr. Hankey, and Chef tells them the talking turd is real. Stan and Wendy say that they believe and Mr. Hankey leaps out of Kyle's shoebox and comes to life. He talks to the crowd about the meaning of Christmas and they stop fighting, mostly out shock of a talking poo. The entire town heads for the South Park Mental Institution to release Kyle, who discovers to his relief that he's not crazy. Mr. Hankey hands out presents, then flies off into the night to spread Christmas cheer.
As the episode ends, something still feels unfinished. Stan, Cartman, and Kyle look at Kenny, still alive and well. The words "THE END" appear onscreen and Kenny jumps up and down in triumph.
"Don't you see? This is the one time of year we're supposed to forget all the bad stuff, to stop worrying and being sad about the state of the world and for just one day say, 'Aw, to heck with it! Let's sing and dance and bake cookies!'"
Craig Tucker can be seen sitting outside Mr. Mackey's office. Although he hasn't been introduced officially yet, he can be seen frequently outside the counselor's office. Craig has his speaking debut in "Rainforest Shmainforest".
The show's three songs "Mr. Hankey, the Christmas Poo", "Kyle's Mom's A Stupid Bitch", and "The Lonely Jew On Christmas" are all heard again in later episodes. "Kyle's Mom's a Stupid Bitch" even made it into the theatrical film South Park: Bigger, Longer, Uncut.
Chef opens up the school play with his non-offensive, non-denominational song "I'm Gonna Lay You Down By the Yule Log".
Trey and Matt credit this episode and "Big Gay Al's Big Gay Boat Ride" for elevating South Park's credibility early on with their moral themes.
Reportedly inspired by the fact that Trey often forgot to flush the toilet as a child. His father told him that if he didn't flush, the turd called "Mr. Hankey" would escape and eat him. Trey and Matt had always planned to create a three-minute short film involving a boy and Mr. Hankey who would not come alive for anyone else. Most of the potential film's elements were reused for this episode.
Kyle's loneliness on Christmas is based on Trey and Matt's childhood of witnessing Jewish children being bullied and ostracized during Christmas. Their schools attempted to be non-denominational and religiously sensitive but to no avail.
The episode is heavily influenced the Peanuts Christmas special A Charlie Brown Christmas. Stan's biblical reading at the beginning of the school play and the snowflake-eating scene are lifted directly from the television special.
The live-action commercial for the Mr. Hankey Construction Set is a parody of Mr. Potato Head. Instead of putting eyes and lips and ears on a potato, you stick the body parts on a piece of poo.
Stan says he's getting the "John Elway football helmet" he wanted for Christmas. This is the first of many times football quarterback John Elway and the Denver Broncos will be mentioned since Trey, Matt, and many South Park residents are fans.
When Mr. Mackey discovers Mr. Hankey in his coffee and exclaims to Kyle "you sick little monkey!", this is in reference to the cartoon Ren & Stimpy.
Minimalist composer Phillip Glass, whose music for the South Park Elementary Holiday Experience triggers a riot.