Since originating in America, the tradition seems to have caught on in family households across the UK.
The elf in question is a character from a children's book, The Elf on the Shelf, published in 2005, which tells the story of how Santa sent an elf to every home to spy on children and report back whether they had been 'naughty' or 'nice'.
The book has an accompanying elf puppet for parents to recreate in their own home - and so the tradition began.
Every day in December, once the kids are in bed parents place the elf in different locations in the house so he pops up somewhere new when they wake up in the morning.
Some parents also opt to leave small presents alongside the elf giving the impression the elf is bringing gifts from Santa.
Children can chat to the elf but can't touch him (otherwise he will 'disappear forever' according to the book).
The book and elf set is now available in John Lewis.
The authors are keen that the elves are not "bought" but "adopted", therefore calling the retail outlets selling the toys as "adoption centres".
It might sound simple, but the tradition has gained huge momentum in America and has seen parents thinking up ever more creative and different poses for their elf (and even making Pinterest boards for ideas).
To kick off the tradition, here are 15 ideas for where to place your elf on the first day, from extravagant marshmallow elf baths to more simple "I'm back" creations. Good luck!