As an infant in a New York City orphanage, Buddy had crawled into Santa Claus's bag on Christmas Eve, and Santa unwittingly brought him back to the North Pole. Not knowing to whom the child belonged, the elves decided that he would be raised by them and that it would never be disclosed to him that he was really a human. However, when Buddy overhears the other elves talking about the fact that he is human, he goes to his adoptive father Papa Elf, for advice.
Papa Elf acknowledges that Buddy is, indeed, a human, and tells him the entire story of how he came to be raised by elves. Most important, he tells Buddy about his human father, Walter Hobbs, who lives in New York City. Buddy soon decides to head off on a quest to find his father, where much comedy ensues from the childlike and wholesome Buddy the Elf being a fish-out-of-water.