Jenn over at Frugal Upstate is hosting a Frugal Holiday carnival.
I must admit that some of our holiday traditions aren't so frugal. I'll skip right over the Christmas Eve meal of t-bone steaks and get to the frugal parts.
Our church has communion by candle light every Christmas Eve. We always sit with an elderly couple who has adopted my family (their children don't live in the area). After church we head home for a not-so-frugal meal (but my dad does by the steaks on sale and freezes them) on our family china. I suppose this could be a frugal tradition since the china was a gift and its reuses every year.
The main frugal tradition comes on Christmas day. We gather with my extended family and do a gift exchange. We draw names on Thanksgiving day and have to spend only $1 on the person who's name we have. That way no one spends too much money - but every gets the fun of shopping and opening presents on Christmas day.