Pastor David Grisham from Anchorage in the US state of Alaska filmed himself entering the Santa Clause House in the small town of North Pole before approaching families in a queue.
Addressing parents and youngsters waiting outside the store's grotto, he said: "I wanted to tell you guys that the real reason for the season for Christmas is about Jesus."
"I wanted to tell you kids today, too, that Santa Claus does not exist.
Former leader of the Repent Amarillo group in Texas, Pastor Grisham now runs the Last Frontier Evangelism-Repent Alaska project.
In a similar incident last year, the former security guard targeted families waiting to have pictures taken with Santa inside a shopping centre, according to Amarillo Globe News.
The pastor also told children in the Santa Clause House: "The man you're going to meet today is a man wearing a suit like a costume and it's make-believe.
"It's not real.
"Your parents have been telling you a story that is not true.
"There are no reindeer, flying reindeer."