Retailers will take advantage of the town's unique shopping arcades and get together to decorate their businesses according to a theme.

The RSL Arcade will be transformed into a fairy kingdom, City Arcade will become Santa's Cave and a bush Christmas will be celebrated in Cassidy's Arcade.

Event co-ordinator and Sassy Lassie owner Joy Robinson said more than 25 retailers have rallied behind the Monaro Street Christmas Festival.

"All the businesses have been very enthusiastic. They all realise that we need to raise our profile," Ms Robinson said.

"Our aim is to bring Monaro Street alive, bring people back down so they know what we've got down here and how committed the businesses are to the community."

The extra special late night shopping event will include street stalls, face painting, a book signing by local author Nichole Overall and of course a visit from Santa Claus at 7pm.

To add to the spirit of the night, festival goers are being encouraged to dress up in costume whether it be an elf, angel or Santa himself.

Deborah Keenan of Beautiful Gifting is one of the businesses participating in the event and she hoped the town supported the initiative.

"Queanbeyan is a lovely place, a lovely town with so many beautiful people here. We just want to bring it back that community feel and get people who live in Queanbeyan to shop and participate in our town," Mrs Keenan said.

The Monaro Street Christmas Festival follows the success of the first Monaro Street Halloween Festival held in October. Ms Robinson said even she was surprised at the popularity of the event.

"The Halloween Festival was great, I was so surprised at the amount of people. On the night there were kids everywhere and people walking around the street," she said.

"We're hoping this will be the first of a long line of festivals. We want to see the street busy and people happy. That's how a small town should operate, everyone knowing and supporting each other."

The Monaro Street Christmas Festival will be held on Thursday, December 5 from 6 - 9pm.