"It's a Wonderful Tiny Toon Christmas Special" is a Christmas-themed episode of the TV series Tiny Toon Adventures. As suggested by the title (and a line in the opening sequence), the story is a parody of the film It's a Wonderful Life.
It's the Christmas season in Acme Acres, and Buster Bunny is in charge of directing the annual Acme Looniversity Holiday Pageant, but Montana Max does everything he can to ruin the rehearsals. Two off-camera voices (in the style of St. Joseph and Clarence Oddbody) discuss Buster Bunny's plight, and just as Buster is about to literally "throw himself out of the picture", his Guardian Toon Angel (with a George Bailey-esque voice) literally gets the boot from "Up There" down to Earth to help him.
Buster Bunny refuses to believe this angel is for real, until he makes a wish that he'd never been created for Tiny Toon Adventures, and the Toon Angel instantly grants his wish. On this note, Buster declares, "Warner Bros. would never let me out of my contract!" until a bolt of lightning disintegrates it from his hand.
The Toon Angel takes Buster Bunny to an alternate reality where he'd never existed. Acme Acres is now called "Montyville" (which would imply that Montana Max, who was called Monty by everyone he knew, albeit as an insult, has completely taken over the city), and Plucky Duck is the new main star of Tiny Toons. With Plucky in charge, now Babs is the one who keeps getting hit with everything but the kitchen sink. Even Acme Looniversity has changed—to a "Business Looniversity" where students wouldn't graduate without learning about business 24/7/365(literally, because Montana Max, the new ruler of Montyville, had given the students an 18-hour day, due to the holidays).
But the final crushing blow comes from Babs Bunny, who has become a major bummer of a nerd after watching Bugs Bunny cartoons in the film vault. After she and Buster introduce themselves to each other and Buster finishes with the famous end line, "No relation," Babs wonders if she knows him (because it's the first time since she'd starred with Plucky on Tiny Toons that that end line has worked). Buster tells her flat-out that they're the real stars of the Tiny Toon Adventures series, but Babs berates that idea and flat-out insists Plucky is the star. On this, Buster pleads with the Toon Angel to send him back to the world he knows, and he disappears and seems to abandon him, until the Babs that Buster knows comes into the film vault and tells him that Monty, as the new pageant director, is ruining the script, and with it, the stage show. Buster's posiiton as director is restored when he returns to the Looniversity, and the play is restored to as he'd written it, with a few changes here and there, and in another part of the room, the "Guardian Toon Angel" reveals himself to be Bugs Bunny in disguise. The program culminates and concludes with the variation of Clarence's note to George: "No Toon is a failure who has friends."