The story is set on Christmas Eve and follows by a young married couple, Jim and Della Dillingham. They are deeply in love but very poor, struggling to make ends meet. Despite their financial hardships, they each secretly plan to buy a special Christmas gift for the other.
Della has beautiful, long hair which is her most prized possession. She decides to cut and sell her hair to a wig maker to raise money to buy a platinum fob chain for Jim's cherished pocket watch. Meanwhile, Jim sells his prized possession, the pocket watch, to buy a set of elegant combs for Della’s long, luxurious hair.