Colourful displays, some donated by pensioners, were snatched from the grounds of Darlaston Town Hall where organisers have been running the festive attraction.
An 8ft-high Father Christmas worth £180, two large bell displays worth £100, a reindeer's face and two large handmade lanterns were among the items which were taken when two male intruders entered the garden at about 2.30pm on Sunday.
The thefts were discovered by stunned staff at Darlaston All Active when they arrived to open the grotto to visitors, including an 80-strong group from Moxley's People's Centre, who had bookings on Monday afternoon.
The incident was captured by closed circuit television cameras. Now the organising team is hoping members of the public will help police to identify the culprits from the still images.
Project manager Sharon Felton said: "We were opening up for the afternoon for the groups booked to come. When I switched on the lights the place was all ransacked, the tree had toppled over and several items were missing.
"I am feeling more than fed up. I feel for the people who put the effort into making the grotto happen. The volunteers got together to do something nice for the community after the Covid crisis and due to the rising cost of living.
"They came up with the idea, made the grotto, donated the lights and spent a lot of time making it all happen. It gave them a chance to do something after the lockdown - now some idiots with no morals have marred it.
"I have worked in this community for 15 years. I don't believe the people responsible are from the town. Darlaston is a very close-knit community where residents support activities such as this. We did a community garden project in September and from that it was decided to run a grotto in the garden for the kids this month.
"Due to the pandemic many young children missed out on the experience of going to a grotto and meeting Father Christmas, and this has been the first time for many of them."
Following a tidy-up operation the grotto at the Victoria Road hall has remained open with dozens of visitors passing through so far this week.
In addition to seeing the lights and the man in red, visitors are treated to food and children are given a gift to take home.
Tickets cost £5 and proceeds from the community event will be ploughed into paying for future activities for struggling families and the elderly.
West Midlands Police has been contacted for a comment.