Every year at Christmas time, the good witch Befana flies on her broom delivering toys to all the well-behaved children of Italy. But this year, Befana’s assistant, the greedy Dr. Scarafoni, intends to force rich parents to pay for toys and to give nothing to poor children! To fulfill his sinister plans, he makes Befana very sick...

Dr. Scarafoni then begins to rule Befana’s shop with an iron hand. He drives out of the shop orphan boy Francesco, who was staring bedazzled at THE BLUE ARROW, a wonderful wooden train...

Outraged, the toys decide to escape: they climb onto THE BLUE ARROW train which starts rolling, rolling away from Dr. Scarafoni! Their aim is to go and give themselves to the children they were meant for. Spicciola, a special toy dog, makes a wish that his nose will lead him to Francesco.

Francesco is accused of stealing the missing toys and arrested. Meanwhile, the toys on THE BLUE ARROW train are chased across the city by Dr. Scarafoni, meeting many dangers on their way. Finally, Befana finds out about Scarafoni’s dreadful plans and has her toymakers create more toys hastily. She gets Francesco released by the police, then rushes to deliver her gifts.

As morning nears, Befana delivers toys to all the good children, rich or poor... and last but not least, turns Spicciola into a real dog for his new best friend Francesco!