Lanie and her mother face a serious problem as their circus is deeply in debt and threatened with foreclosure. After Milton encourages Rudolph and Frosty to come down from the North Pole to help with saving the circus, their efforts prove successful. But things go bad when Sam Spangles is able to steal the box office earnings from the Fourth of July celebrations, and Rudolph, in order to protect Frosty and his family from melting, accepts the blame, causing his nose to be extinguished as he used it for evil.
Lanie and the others are devastated that Rudolph stole the money, and his performance suffers as well. Worse was to come when they discover Frosty inanimate after losing his hat, having given it to Winterbolt. However, as Sam arrives to order Lanie, her mother, and everyone else to clear out so he can take over, Rudolph returns with Frosty's hat, the money, and a policeman, who explains everything to Lilly, arrests Sam, and Frosty is reanimated. However, Winterbolt arrives to confront everyone, refusing to accept defeat as long as he still has his Ice Scepter and powers, but his scepter is shattered by Lilly throwing her iron revolvers at it, killing Winterbolt as he turns into a tree.
Unfortunately, Lanie soon discovers the fate of Frosty and his family as, without the magic from the amulets they were given by Winterbolt, they've all melted, leaving everyone heartbroken. Luckily, Big Ben arrives with Jack Frost, who is able to revive Frosty's family, and when Santa and Jessica arrive, they take Frosty's family back to the North Pole, while Milton and Lanie wave goodbye from a hot air balloon, while Rudolph stays with Lilly until her circus is out of debt.