Christmas is an annual Christian religious holiday commemorating the birth of Prophet Jesus, peace be upon him. For many Muslims who even do not celebrate the birthday of the Prophet Muhammad, peace be upon him, it becomes an issue of what stand they should take.
There have been a number of legitimate criticisms of the holiday from Muslims and non-Muslims based on theological and cultural considerations. However, this cannot be used to disregard the holiday as merely an exercise in ancient pagan practices, for instance, or excessive consumerism. Muslims have to remember that for practicing Christians, Christmas really is about Jesus.
Prophet Muhammad, peace be upon him, was so accommodating of Christians that according to the two earliest Islamic historians, Ibn e Saad and Ibn Hisham, the Prophet even allowed a delegation of 60 Byzantine Christians from Najran in Yemen to worship in his own mosque in Madinah. Lead by their bishop (Usquf), they had come to discuss a number of issues with him. When time of their prayer came, they asked the Prophet’s permission to perform this in the mosque. He answered, “conduct your service here in the mosque. It is a place consecrated to God.”
God expects us to stay away from mocking the religious beliefs of others, no matter how much we disagree with them. He says in the Quran: “And insult not those whom they (disbelievers) worship besides God, lest they insult God wrongfully without knowledge. Thus We have made fair-seeming to each people its own doings; then to their Lord is their return and He shall then inform them of all that they used to do” (Quran, 6:108).
We also have to remember that even if for many nominal Christians, the celebration is not really about participating in religious traditions, Christmas is a time for families to get together. In a number of cases it is the only time of year families get together, either because family members are scattered in different parts of the country or the world, because of communication and relationship problems, or because in America today, the family unit is becoming weaker and weaker.