Alien life form Gordon Shumway crash lands into the garage of the Tanner family. The Tanners call him "ALF" decide to keep his presence a secret so that the U.S. Government will not take away the space being and subject him to experiments.
When everyone is leaving the house for the evening except Brian and ALF, Kate doesn't want ALF to babysit Brian, so they ask Mrs. Ochmonek to babysit. When Mrs. Ochmonek starts to watch "Psycho", ALF tries to sneak out of the bedroom.
ALF, having lost his planet in an explosion, becomes very concerned about earth's nuclear proliferation. He uses Willie's short wave radio to contact the President aboard Air Force One - to the great displeasure of the FBI.
ALF is insulted that the Tanners consider him a parasite. He tries to make money to be less of a burden on the family, but puts Willie's credit card over the limit purchasing "Terry Faith Cosmetics" to sell at a house party.
To cheer up the sad ALF, Brian and Willie start broadcasting a message into space - and are very surprised when old friends of ALF answer them and offer to pick up ALF.
When ALF finds an old bucket list of Kate and Willie, Willie starts to have second thoughts about the things he did not do in life - he decides to do a parachute jump he always wanted to dare.
Leaving ALF alone is a recipe for disaster so the family takes him along in the RV. The weather turns stormy and ALF gets bored sitting in the RV and starts complaining. Willie goes mental and kicks out ALF. In defiance, ALF wanders off.
It's Christmas time. Unfortunately ALF chops the Christmas tree into firewood before anyone notices. The Tanners then have two tasks: To teach ALF all about Christmas and find a new Christmas tree as well.