George Bailey (Stewart) has spent his entire life in the small town of Bedford Falls. Despite his yearning to see the world, George has always sacrificed his personal ambitions for the sake of his family and the local community.

When a costly mistake pushes George to the brink of despair, he receives a visit from Clarence, a celestial messenger, who prevents him from jumping into a freezing river. The pair travel together through moments in George's life to show him what the world would be like if he had never existed.