In the early phase of the Battle of the Bulge in December 1944, a small US Army intelligence and reconnaissance squad is sent to occupy a deserted chateau near the German lines to gather information on the enemy's movements. Losses from an earlier patrol has reduced the squad to just six men: Sgt. Knott, Miller, Avakian, Shutzer, Wilkins and Mundy. On their way to the chateau, the men discover the frozen corpses of a German and an American in a standing embrace, seemingly arranged by the Germans as a grim joke. Settling into their temporary home, they soon discover they are not alone. A group of German soldiers has occupied a position nearby. While out on patrol, Knott, Miller and Shutzer see a trio of German soldiers aiming their weapons at them, but the Germans then vanish without shooting. The Germans, clearly more skilled and experienced than the young GIs, soon leave calling cards, start a snowball fight one evening and offer a Christmas truce. At first, the Americans think the Germans are taunting them, but it eventually becomes clear that the Germans wish to talk to them. Shutzer speaks enough German to communicate with them, and they are revealed to be a small group of teenagers led by an aging officer. Having survived the Russian front and sensing that the end of the war is imminent, the Germans say that they wish to surrender. However, they ask that the Americans pretend that the Germans were captured in combat in order to protect their families from possible retribution for their desertion. The Americans agree, but keep the plan from Wilkins, who has been mentally unstable since learning of the death of his child back home. The two groups meet and proceed to fire their weapons into the air as planned. However, Wilkins hears the shooting and thinks that the engagement is real. Arriving at the scene, Wilkins opens fire at the Germans who, thinking they have been tricked, immediately shoot back. The situation immediately goes out of control and Knott's squad shoots all the Germans, but Mundy is fatally wounded and Shutzer is shot but survives. Mundy's final words are to beg the others not to tell Wilkins that the skirmish was intended to be fake. The squad's superior officer arrives, reprimanding them for their conduct, before taking Shutzer back for treatment. Left alone again, the four remaining soldiers quietly reflect as they try to celebrate Christmas and clean Mundy's body in a bathtub. Knott makes a $100 bet with the despondent Wilkins that he will survive the war. The squad is soon forced to flee as the Germans attack the area in strength. Carrying Mundy's corpse, the men disguise themselves as medics and escape back to American lines. When there, Knott is informed that Wilkins has been recommended for the Bronze Star and transferred to the motor pool, while the rest of the squad will be sent into the front lines to fight as regular infantry. An epilogue screen tells that after the war, Avakian was married, Miller disappeared and Wilkins sent Knott $10 with a blank Christmas card each year for ten years to pay Knott for having lost their bet.
The film received mostly positive reviews, with an 88% favorable rating on Rotten Tomatoes based on 40 reviews. A reviewer from the Washington Post lauded it as "a war film completely unlike any other, a compelling accomplishment that's more soul than blood and bullets." Vincent Canby of the New York Times praised the film's solid construction, concluding that "In A Midnight Clear, just about everything works." Writing in the Los Angeles Times, reviewer Michael Wilmington characterized the film as "...not quite a great war movie but certainly a sensitive, bright and supremely moral one" and added that "At its best, it's a barely muted cry against war's stupidity and injustice. With a clear eye, the movie shows us midnight." Reviewing the film's 2012 DVD release in the Observer, Philip French described the film as "an ironic, at times surreal fable.....and the plot's twists are matched by the sharpness of its moral insights."