Plot

A young reindeer Rudolph lives at the North Pole. His father is one of Santa's reindeer and it is expected that Rudolph will eventually be one too. However, he has a feature which is a setback and causes him to be ostracized: his red nose.

Sam the snowman tells us the story of a young red-nosed reindeer who, after being ousted from the reindeer games because of his beaming honker, teams up with Hermey, an elf who wants to be a dentist, and Yukon Cornelius, the prospector. They run into the Abominable Snowman and find a whole island of misfit toys. Rudolph vows to see if he can get Santa to help the toys, and he goes back to the North Pole on Christmas Eve. But Santa's sleigh is fogged in. But when Santa looks over Rudolph, he gets a very bright idea...—Kathy Li

Sam the Snowman narrates the life story of Rudolph to an unseen audience. The story begins with a newborn reindeer. He is Rudolph, son of Donner, and he is expected to one take his father's place among Santa Claus' reindeer. But the happy parents are shocked when they realize that Rudolph is not a normal reindeer. He is a red nose which glows with its own light. Santa Claus himself is not pleased with Rudolph's unusual appearance, and does not see him as a potential recruit. Donner decides to mask his son's nose, and to keep this detail secret.

The scene shifts to Santa's work force, the Christmas elves. They are all working hard as toy-makers, but one of them does not like his job. He is Hermey, whose life goal is to become a dentist. He studies a dentistry book whenever he can. His foreman keeps chastising him, and his fellow workers mock him.

In April, Rudolph is old enough to participate in Reindeer Games with other young fawns. He performs rather well in his first attempt to fly, and attracts the attention of a charming doe, named Clarice. He is happy when she flirts with him, but his disguise falls off. He is mocked for his red nose, he is rejected by his only friend, and he is banned from all Reindeer Games by Coach Comet. The only one who still supports him and comforts him is Clarice. But her father orders her to quit socializing with Rudolph. Rudolph has become an outcast.

Rudolph runs away from home, at about the same time Hermey decides to quit his job. They befriend each other, and flee Christmastown together. Following a snow storm, they are briefly lost in the wilderness. They are rescued by a lonely prospector, Yukon Cornelius, who offers them a ride on his dog sleigh. The trio are attacked by an Abominable Snowman (Yeti), but manage to escape on a floating piece of ice.

Donner sets out to search for his missing son. His wife and Clarice join forces in starting their own search for Rudolph. Floating through the Arctic Sea, Rudolph and his companions land on the Island of Misfit Toys. Sentient toys who were rejected due to major or minor physical flaws end up there. The trio are offered hospitality by the island's king, Moonracer, who is a winged lion. But he informs them that they can not hide among the toys. Rudolph worries that his glowing nose will give away their position to the Yeti, and endanger his friends. So he flees from them while they sleep.

Rudolph spends the rest of the year alone, evading attacks by the Yeti. By December, Rudolph has grown up both physically and mentally. He feels it is time for him to return home, as he can not escape his problems by running away. In Christmastown, he learns that his parents and Clarice never returned from their search for him. He decides to in turn search for them in the wilderness.

The Yeti has captured both of Rudolph's parents and Clarice. Rudolph tries to rescue them and he is knocked unconscious. But Cornelius and Hermey locate their missing friend, and decide to join the battle. Hermey removes all of the Yeti's teeth. Cornelius physically attacks the scared Yeti, and they both fall down a cliff. Rudolph mourns for Cornelius.

The misfits are welcomed back by Santa, who has regretted his mistreatment of Rudolph. Cornelius returns shortly later, along with the tamed Yeti. But the most severe snow storm on record has affected Christmastown and most of Santa's intended destinations. He is about to cancel that year's Christmas Eve's journey, but he realizes that Rudolph's glowing nose can lead the other reindeer through the darkness. Rudolph is appointed the new leader of Santa's reindeer.

Santa arrives on the Island of Misfit Toys, and takes several of them with. After years of being unloved, they are finally delivered to children. The films ends while Rudolph's flight and the delivery of the toys are still going on. Rudolph has found that his physical flaw was actually an asset.