It's the end of the school year on Walton's Mountain and Jim Bob will be graduating. When teacher Corabeth informs him that as long as he passes an upcoming test, he'll have the highest grades in his class and will be the valedictorian. However, Jim Bob is less than thrilled the prospect of having to stand up and give a speech and contemplates failing on purpose so he won't have to. Then on graduation day, Corabeth panics when she can't find Jim Bob and his classmates, only to have a surprise when they eventually arrive in time to receive their diplomas.

When a Mexican-American paratrooper who Curt saved at Pearl Harbor arrives on the mountain to personally deliver a medal awarded to Curt, things get off to a rocky start when bigots start picking on him due to his heritage. While there, Mary Ellen helps him work through his anger and the pair become close. Meanwhile, Corabeth crosses paths with an old beau who is preparing to go overseas with his Army unit.

While home on furlough, John Boy has a hard time trying to remember when he was shot down with his friend Stewart while flying over Belgium. Ike looks to John for help when he gets drafted by the Army.

After an encounter with a GI, Ben is annoyed with what he feels to be preferential treatment in regards to being deferred in the draft to work at the mill. After getting into trouble with their respective families, Jeffrey and his friend Josh Foster get in trouble gambling. When Josh gets caught trying to steal their winnings out of Ike's store, Jeffrey starts to feel guilty when Josh has to deal with all the fallout.

When a German POW escapes from a nearby camp and hides out on Walton's Mountain, he befriends Jeffrey, and in turn helps the boy find the true meaning of Christmas.