Retailers have long been accused of secularizing Christmas by using "Xmas" in signs and advertisements; therefore, I suspect many of you will be surprised to learn that "Xmas" has a religious origin. In Greek, the letter "chi" is written as an X, and chi is the first letter of the Greek word for "Christ." Greeks sometimes abbreviated "Christ" as "X." For example, they abbreviated "Christ savior" as "XP." ("P" is the symbol for the Greek letter "rho," which is the first letter of the word "savior" in Greek.) The Oxford English Dictionary shows the first known English use of "Xmas" in 1551.
As for appropriateness, "Xmas" may have a religious origin and fit better on signs, but many people -- both those who use "Xmas" and those who complain about its use -- are unaware of the religious origin. If you choose you use "Xmas," you should know that some people will be infuriated.
source: Grammar Girl
