A mother takes her son Christmas shopping and he goes on and on about the presents he wants. They leave a coin for the Salvation Army Santa outside, who tells the boy to be good and maybe he'll get the coonskin cap that he wants. The mother realizes that the store is closed and they leave to find another one. The Santa begins to pack and a man emerges from the shadows and says the boy will be disappointed if he doesn't get the cap. The Santa figures that the boy will either thank his mother or blame himself, and the man rants about how Santa is blameless no matter what. He then shoots the Santa five times.
A young girl, Susie, comes downstairs six days before Christmas Eve and finds a beardless Santa seated at the family Christmas tree, playing with her father's train set. When she wonders why he's there early, the man who shot Santa earlier, Emerson, blames it on Rudolph and explains about how Christmas doesn't really make sense. Susie points out that there's blood on his suit and Emerson says that it's not his. He asks Susie to take him to her parents.
Susie wakes her father up and says that it's Christmas. He wonders what she means and Santa says that Christmas has come early. He hauls the mother and father down to the living room and ties them up with Christmas lights, and explains that he picked their house because they overdecorated. The father says that there's nothing wrong with a little Christmas spirit and Emerson hits him with a bell. He asks them if they appreciate being with their family and they quickly agree. Emerson says that he's going to leave them some terror, says that he isn't feeling Christmassy, and shoots them both dead.
Sister Mary Eunice puts on Christmas music in the common room and then whistles everyone to attention. She tells them that they're celebrating Christmas despite Sister Jude banning it after the previous year's disaster because now they're under new management. Sister Mary Eunice improvises ornaments using items from the patients. Arden comes in and sees what the nun is doing and turns around and leaves without a word.
Frank is in the lab praying over Grace's corpse. He imagines her looking up at him and backs away in horror, and then vows to her that he'll make things right. Arden comes in and Frank says that they should call police. The doctor warns that they'll be interested to hear that Frank shot an unarmed woman, However, Frank says that he's ready to face the consequences and Arden says he'll see what he can do.
Sister Mary Eunice lights a fire in the office and Sister Jude grabs her from behind and holds a knife to her throat. She realizes that the demon is protecting itself from the holy symbols by using Sister Mary Eunice's purity. The demon warns Sister Jude that she made a big mistake coming back to Briarcliff. It laughs and the cabinet with the canes springs open and they fly through the air as the record shatters. Arden comes in and Sister Mary Eunice tells him to call security. He does and the security guards usher her out as she warns that the Devil is among them. Arden tells Sister Mary Eunice not to underestimate Sister Jude and then explains that Frank wants to confess. The nun assures him that she has it under control.
Emerson is locked up in a dark cell. The door opens and someone tosses him a decorated box. He's surprised that Sister Jude came to see him and Sister Mary Eunice tells him that the older nun is gone.
Sister Jude organizes the patients on Christmas for a photoshoot. A handcuffed Emerson comes over and asks her to release him, but she points out that he killed 18 people and five families in one night. Emerson refuses to cooperate, saying the whole thing is a fraud, but Sister Jude insists that the picture is to remind the public that without Briarcliff, Emerson would be out there with them. She tells Emerson that he'll be front and center and in shackles. Sister Jude goes on her way and notices that one of the orderlies, Sean, is handing out presents despite her strict orders. Sister Mary Eunice brings the photographer in over and while Sister Jude berates her for bringing him in earlier, Emerson grabs Sean and rips his throat out with his teeth.
Emerson tells Sister Mary Eunice that she doesn't want him out there during Christmas. She assures him that she knows all about him, that he was a petty criminal thrown in jail for stealing a loaf of bread. While he was there, the jailers caroled in the cell block while five men raped Emerson and took his Christmas spirit. She offers him his Santa suit as Emerson says that once he got out, he found the suit and knew who was naughty and who was nice.
Arden goes to the office and finds Sister Mary Eunice smoking. She talks about her childhood and asks Arden about his Nazi Christmas celebrations. Arden says that his childhood Christmas celebrations were among his fondest childhood memories and gives her a present. Sister Mary Eunice is shocked and pleased to discover that he's given her ruby earrings. When she wonders where he got it, Arden explains that he took them from a Jewess in the concentration camp. She complained about her stomach problems and Arden followed her into the toilet. The woman explained that she swallowed them every day in the hopes that she would one day be restored to her original grandeur. She died of stomach lacerations caused by the earrings and Arden kept them in the hope that he could give them to someone worthy. Sister Mary Eunice puts them on and admires herself in the mirror, and calls Arden a sap. He admits that he'd hoped that she couldn't bring herself to touch them and that he'd see a glimmer of the Sister Mary Eunice he once knew. The nun calls him pathetic and reminds him that he's no angel either. She warns Arden that he's either with her or against her, and that if he's against her then even God can't help him.
Lana is throwing up and asks the attending nurse if Sister Mary Eunice has called the police like she promised. The nurse says that Lana can count on the nun to keep her word. Lana hears Kit muttering across the room and goes to see him.
Sister Jude meets with Sister Claudia, who warns her that she's been discredited and can't get her back in. Despite that, Sister Jude says that she isn't running anymore and that she's realized that God wants her to be a solider in God's army. She starts ranting about how the TVs aren't showing anything about Christ and that the Devil can't have Sister Mary Eunice. As Sister Claudia promises to do what she can, she gets a call and tells Sister Jude that she has a visitor.
When Sister Jude goes to the chapel, she finds Arden waiting for her. He admits that it was hard for him to turn to her for help and admits that she was right about Sister Mary Eunice. Arden has no medical explanation for what has happened to her. Arden jumps at a noise and Sister Jude realizes that he's afraid. She tells Arden to go to hell and walks away, and Arden says that he believes in evil and has seen it up-close and personal. Because of that, Sister Mary Eunice's purity meant a great deal to him, and that purity has gone out. Arden begs Sister Jude to help him and she agrees, but only for Sister Mary Eunice, not for him. She tells the doctor to do everything she says without question and Arden agrees.
That night, Monsignor Howard visits the patients brings a hand-carved star for the tree as Sister Mary Eunice and Arden look on. Howard congratulates Sister Mary Eunice on her forward thinking and the fact that she trusted Emerson to dress as Santa. As Emerson sexually harasses the female patient sitting on his lap, Howard talks to Arden and suggests that they set aside their disagreements and celebrate. The Monsignor praises Sister Mary Eunice and Arden agrees that she's quite at reassure. Meanwhile, the nun tells Frank to bring a ladder so she can put the star on top of the tree.
Kit is doped up via IV and dreams of bringing a Christmas tree home for his pregnant wife, Alma. He figures that it's a boy and promises to teach it to play sports. Alma suddenly transforms into Grace and tells him that it doesn't matter why she's back. As they dance, Lana tries to wake him up. She heard on the radio about the manhunt for him and then realizes that the police don't know about him or her. Kit wakes up and tells Lana that Grace is dead, and the reporter says that they both have to get out. She removes the IV and promises Kit that she can prove he's innocent and Thredson is Bloody Face. Kit wonders if she's hurt but Lana simply says that they have to find a phone and warn the authorities.
Arden goes to the kitchen and lets Sister Jude in. He tells her where Sister Mary Eunice is and the nun tells him to bring Sister Mary Eunice to her office so she has time to get through to her. As she leaves, Sister Jude admits that she's surprised that they're working together.
As they prepare the tree, Howard congratulates Sister Mary Eunice, who suggests that he stay to see Frank put the star on the tree. Meanwhile, Emerson knocks the ladder over and stabs Frank with the star. The orderlies restrain Emerson while Frank beats him repeatedly. Sister Mary Eunice tells the head to guard to take Emerson to solitary and they hustle him off. Meanwhile, Arden approaches the nun and says that he has something important to show her in her office.
Lana goes to the room with the phone and starts dialing. However, Thredson comes in and advises her not to make a toll call.
Frank tosses Emerson in solitary and locks him in As he turns to go , Sister Mary Eunice steps forward and says that Emerson must have given him trouble. When Frank disagrees, the nun cuts his throat with a straight razor as Emerson watches through the cell window. He laughs as she says that she hopes they're not looking at a rampage.
Sister Jude is praying in the office when she hears the door close. She turns and finds Emerson there. Sister Mary Eunice locks the door behind him and turns to Arden, assuring him that his loyalty isn't in question.
Emerson advances on Sister Jude, who tries to open the door without success. He picks up a letter opener and reminds the nun that she locked him up and left him to rot. Sister Jude suggests that they pray but Emerson starts beating uholy06her. Outside, Arden and Sister Mary Eunice listen. He says that he finds the whole thing tedious and departs to take care of more pressing matters.
Thredson pulls out the phone line and says that her story was in the newspapers. He explains that since Lana left him, he's been cleaning up his entire house to make sure all the evidence was destroyed. Thredson winds the telephone wire in his hand and says that he was originally going to let her talk since no one would believe her. But he's offended that she betrayed his intimacy and plans to kill her. When Lana tries to run, Thredson grabs her and says that now he understands why they've been brought together. He plans to bring Bloody Face back and use her skin for his mask. As he drags her out, Kit clubs him down from behind.
Emerson dances Sister Jude around the room, slamming her into the cabinet with the canes. Seeing them, he remembers Sister Jude whipping him with them and figures that it's a sign from God. He takes a cane and slams Sister Jude down onto the desk. As he whips her, he describes how his welt festered and assures her that there is no God.
Lana tells Kit that they have to kill Thredson. However, he says that they need Thredson alive so that they can clear his name. Lana wonders why there isn't a manhunt and why Sister Mary Eunice hasn't turned Kit in.
As Arden uses a mine car to take Grace's corpse into the death chute, he suddenly clutches at his head in pain. A bright light appears up ahead and alien figures appear. When the light fades, Arden discovers that Grace's body is gone.
Emerson throws Sister Jude on the bed and prepares to rape her. She stabs him with the letter opener that she grabbed from her desk and he falls to the floor.
Lana and Kit tie Thredson up and take him to a junk room. They restrain him in a circle of beds and as Kit goes back to the infirmary, Lana promises Thredson that she'll bury him one day.