The pickle ornament has mysterious origins. Some of the ornaments come in packaging that says they are part of a German tradition. There is a German mythbuster website that speaks pretty extensively about this, and since it has American Civil War ties, I'll go ahead and cut and paste it into the forum. Personally, I think it's all about marketing...and as a seasonal decoration for whatever faith you might be, provides a fun story.
Here's the blurb from About.com's German Myth 11:
A number of years ago when she was About's “Germany for Visitors” Guide, Rita Mace Walston wrote an article about the Christmas pickle ornament tradition. Despite her German background, she also had never heard of it. She wrote: “I did some first-hand research, asking friends, acquaintances, and even a few Christmas market vendors if they knew of the custom. I consulted my family in Bavaria, my best friend in Swabia, and folks who hailed from the different regions of Germany. No one had a clue as to what I was talking about. One acquaintance wanted to know if I wasn't trying to pull one over on her...”
Then Rita heard from someone who claimed to have an answer that might solve the mystery. A descendant of a soldier who fought in the American Civil War, John Lower (Hans Lauer?), born in Bavaria in 1842, wrote to tell about a family story that had to do with a Christmas pickle. According to family lore, “John Lower was captured and sent to prison in Andersonville, Georgia. ...In poor health and starving, he begged a guard for just one pickle before he died. The guard took pity on him and found a pickle for John Lower. According to family legend, John said that the pickle—by the grace of God—gave him the mental and physical strength to live on. Once he was reunited with his family he began a tradition of hiding a pickle on the Christmas tree. The first person who found the pickle on Christmas morning would be blessed with a year of good fortune.”
Whether this Bavarian-American pickle story is true or not, and if it really gave rise to the Christmas pickle legend is open to question. One may doubt the story itself. If you thought you were dying, would your last wish be for a pickle? Plus, it's a long way from a real pickle in Georgia to a glass pickle ornament in Germany! The Civil War ended in 1865, but glass Christmas tree ornaments did not become popular in the U.S. until around 1880, when F.W. Woolworth began importing them from Germany. However, one thing is certain: the “German” Christmas pickle tradition is virtually unknown in Germany. But...
The Lauscha Connection
There may be, however, a somewhat tenuous German connection to the glass pickle ornament. As previously mentioned, glass Christmas ornaments were being produced in Germany. As early as 1597, the small town of Lauscha, now in the German state of Thuringia (Thüringen), was known for its glass-blowing (Glasbläserei). The small industry of glass-blowers produced drinking glasses and glass containers. In 1847 a few of the Lauscha craftsmen began producing glass ornaments (Glasschmuck) in the shape of fruits and nuts. These Glaskugeln were made in a unique hand-blown process combined with molds (formgeblasener Christbaumschmuck). Soon these unique Christmas ornaments were being exported to other parts of Europe, as well as England and the U.S.
Today Lauscha exports glass pickle ornaments to the U.S.—where they are sold along with the “German” tradition story.
Christmas Pickle Poem:
To start a tradition that will surely last,
Here's the story about the pickle of glass.
The night before Christmas, it's hung on the tree
While everyone's sleeping, it's done secretly.
And on Christmas morning, when you arise,
The first one to find it will get a surprise!
A family tradition for all to share,
You'll look for the pickle year after year.