In 1977, Jim Henson produced a remarkable one-hour television special in Toronto for the Canadian Broadcast Corporation. Based on a book by Russell Hoban, a fantasy novelist and children’s writer, “Emmet Otter’s Jug-Band Christmas” was a riff on “The Gift of the Magi.” It featured a single-parent family of impecunious otters who are barely getting by in their hometown of Frogtown Hollow and thus struggling to buy each other Christmas gifts. The titular musical endeavor, for which Ma and Emmet both pay a heavy personal price, proves to be their salvation.

Kermit the Frog was the narrator and the verdant amphibian also popped up later, pithy as ever. Frank Oz voiced Alice Otter. Henson voiced various snakes, beavers and foxes.

With its blend of Henson’s famous Muppets and characters from the novel, “Emmet Otter” is now viewed by Henson historians as a seminal work. Although Henson’s Muppets dated back to the 1950s, “The Muppet Show” still was just a couple of years old in 1977 and Henson was already experimenting with radio-controlled puppetry and far more complex physical setups.

A year later, “Emmet Otter’s Jug-Band Christmas” showed up in the U.S. on the cable network HBO, only six years only at the time. And then through syndication, and eventually the wonders of VHS tapes, it became a popular and eventually beloved staple of holiday programming, shoved into many a VCR on Christmas Day.

And thus the title is a fine idea for a live production, which just happens to be opening Monday at the Studebaker Theater in Chicago.

Over the last few weeks, a high-caliber production team led by the writer-producer Timothy Allen McDonald and the director-choreographer Christopher Gattelli has rehearsed the show at the Fine Arts Building. (The two partners cowrote the book to the live musical.)

The show’s full title now has acquired a possessive: “Jim Henson’s Emmet Otter’s Jug-Band Christmas.” Otherwise, though, it wears its past on its sleeve and aims both to draw on the pervasive nostalgia for the piece and to introduce a new audience to its charms.

The Chicago production is not the first outing; the show tried to make a go of it in the height of the pandemic at the New Victory Theatre in New York, but that proved impossible. Now, after much more extensive development, McDonald and Gattelli say their plan is to expand beyond the so-called children’s theater market and open on Broadway next year.

Sitting in a rehearsal studio upstairs at the Studebaker, it’s not hard to see why.

Even back in the TV days, “Emmet Otter” was a legit musical with songs by no less than Paul Williams, the iconoclastic actor-singer-songwriter who seemed to be write every pop lyric in the entire 1970s, coming up with the words to “Rainy Days and Mondays,” “I Won’t Last a Day Without You” and “We’ve Only Just Begun” for The Carpenters, penning “Evergreen” with Barbra Streisand, and writing numerous hits for Three Dog Night and various other movie scores, including “Bugsy Malone.”

Williams loved working with Henson and getting the chance to write both words and music for “Emmet.” In 1979, Williams would write the lyrics to the Academy Award-nominated song “The Rainbow Connection” for “The Muppet Movie,” a hugely successful film that expanded many of the ideas Henson had worked on with “Emmet Otter.”

During the 1980s, the Muppets further cemented themselves as superstars but on May 16, 1990, Henson died at the age of 53. Toward the end of his life Henson already was negotiating with Disney, but it actually took 14 years for Disney to fully acquire the Muppets brand. When the transaction finally closed in 2014, Kermit starting working for Disney but the Henson Company retained the rights to just a few of its productions, the one’s closest to Henson’s heart and those of his children. “Emmet Otter’s Jug-Band Christmas” (which had already had a tryout as a live show at the Goodspeed Opera House in 2009) was one of them.

And that is what allows everyone to be rehearsing in Henson-infused happiness on Michigan Avenue, even if the Disney-owned word “Muppet” is now verboten in marketing and press materials and Kermit is not currently scheduled to appear in Frogtown Hollow. (Although it’s a good bet he would have liked to have been there.)

Everyone involved in the production reveres the old-school Henson legacy. “I had never been part of a gang that had a treehouse,” Williams said one afternoon as he paid a visit to rehearsals, and his 46-year-old songs. “Jim had a childlike wonder about him and I knew that ‘Emmet’ was really my audition for ‘The Muppet Movie,’ which I so badly wanted to do.”

Aside from the existing material, Williams also has written five new songs. He describes the “Emmet” score, new and old, as “Americana, which I had never really done before but that seemed to fit me very well.” And, indeed, it sounds like it does.

“Jim’s dream always was to do a Broadway show,” McDonald says. “We found it impossible to work as we had wanted at the New Victory because all we were doing was COVID testing and putting in swings. We just never got to do what we now are doing in Chicago.”

Is “Emmet Otter” strictly a holiday show? It’s not inherently, McDonald says, despite the role of Christmas gifts in the plot. The original TV special did not have seasonal clutter (not even a Christmas tree) at the show’s core but rather offered a stirring tale of otter forbearance and triumph. “We’ve amped up Christmas a bit,” McDonald says, “but we think audiences will tell us what we have.” So maybe “Emmet” could play a typical Broadway run, post-Chicago.

The show certainly is aimed at families: grandparents and parents who want kids and grandkids to fall for the otters and for the Henson puppets as they themselves did in the 1970s.

And there is one thing about this show quite different from most of the puppetry you now usually see in live entertainment, such as Milky White in “Into the Woods” or the residents of “Avenue Q” or the gazelles of “The Lion King.” In “Emmet Otter,” as in almost everything that came out of the Henson Company, the audience does not see the puppeteers.

Even in this rehearsal, as still-visible Chicago and New York actors clad in black intermingle with the live performers Andy Mientus and Kathleen Elizabeth Monteleone, playing the central mother-and-son otter-duo, a visitor is struck by how easily the eye goes to the puppets themselves, which are delivering moral advice, as Henson’s creations so often did. Here, squirrels are philosophers and beavers are vocalists and there is nothing and no one between you and them. As Henson well knew, this is a lot harder to pull off live than when all you have to worry about is the frame of a camera lens, of course, and it is occupying a lot of rehearsal time. As well it should.

“When you see a puppeteer, you’re experiencing a double event,” McDonald says. “In Jim’s work, the puppet had a life all of its own. It’s always been mesmerizing to all of us.”

After the cast has sung one of Williams’ new, sweet songs, the rehearsal takes a break. Gattelli is giving notes to the puppets.

Chris Jones is a Tribune critic.

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