Popular legend often attributes the creation of the first decorated Christmas tree to Martin Luther. Walking one night and looking up at the starry sky through the branches of trees, he was struck with the idea and hurried home to place candles on the branches of a tree.

The predecessors of the Christmas tree can be seen in the many pagan customs involving tree worship. These especially involved evergreens during the cold of winter when sacrificing to or decorating with greenery was looked upon as a good way to ensure good crops the following year.

The immediate ancestor of the Christmas tree was the paradise tree. In the medieval Church calendar, December 24 was Adam and Eve Day. Many plays would act out the fall of the first two human beings to make clear the meaning of Christ's birth the next day, the coming of the "second Adam" to redeem the failure of the original. A main set piece of this play was the paradise tree, the tree from which Adam and Eve ate against God's command. It being winter, the tree consisted of a fir tree hung with apples. The custom became popular in homes as well as on the stage, and many German households began to set up their own paradise trees on Christmas Eve. In keeping with the legend that trees bloom at midnight on Christmas Eve, paper flowers and other fruits were hung on the trees. Wafers were added as a symbol of the body of Christ, as in the Communion wafer. These wafers gradually were replaced by cookies.

The first reference in print to Christmas trees is a forest ordinance from Ammerschweier in Alsace, Germany, in 1561. This statute says that no burgher "shall have for Christmas more than one bush of more than eight shoes' length." The custom had become so popular that too many trees were being taken from the forest. In 1605 the first description of fully decorated trees came from Strasbourg.

"At Christmas they set up fir-trees in the parlours at Strasbourg and hang thereon roses cut out of many-colored paper, apples, wafers, gold-foil, sweets, etc."

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