The lights in Newburgh, Fife, bring the drawings of local youngsters to life and include a reindeer, angel, gingerbread man and turkey.
Organised by Newburgh Action Group, the display has been adding some sparkle to the village since the lights switch-on took place on Saturday.
Pictures of the lights have drawn praise from around the world since they were posted on social media in a tweet that has been liked more than 142,000 times.
Poppy McKenzie Smith, who posted the images of the decorations on Twitter, said: "They are quite famous in our local area and I've never seen any other towns that do this.
"It is a big moment for the community when they are switched on.
"The idea started about 20 years ago when we just had normal lights but then the competition to design a light started and each year one of the lights was taken down and replaced by a light designed by one of the children.
"When you have a light it is always there so there are teenagers who still have their light there."
In her tweet with four photos of the lights she wrote: "Our village Christmas lights are designed by the local primary kids and they are the single best thing about the festive season."
Twitter users shared their delight at the images with one person replying: "My heart has absolutely MELTED these are so precious" while another wrote "This is one of the most magical things I have ever seen, I love it!"
The decorative lights also include Christmas trees, a polar bear and a penguin.
School closures earlier in the year amid the coronavirus pandemic meant there was not time for the usual competition for children to design a new light in 2020 so decorations from previous years have been used.
Newburgh Action Group was not able to fundraise as normal either so has set up a GoFundMe page to raise money for the Christmas lights display, which has surpassed its £1000 target.
The fundraising page can be found here