The idea of celebrating the Nativity on December 25 was first suggested early in the fourth century CE, a clever move on the part of Church fathers who wished to eclipse the December 25 festivities of a rival pagan religion, Mithraism, which threatened the existence of Christianity.
In ancient times, Dec. 25 was the date of the lavish Roman festival of Saturnalia. It was a time when gifts were exchanged; homes, streets and buildings were decorated; people came home for the holidays and everybody was in a happy, party mood. It has been said that early Christians chose the date of the Saturnalia in order to avoid attention and thus escape persecution.
When the Roman emperor Constantine officially adopted Christianity in the 4th century, the date of Christmas remained Dec. 25.
Christs birth almost certainly did not occur 2,002 years ago. Our present chronology by which the years are numbered as AD or BC was conceived by the Roman abbot Dionysius Exiguus around 523 AD.
Unfortunately, Dionysius made two significant errors in his calculations. The first was his placement of 1 AD immediately following 1 BC, completely disregarding the mathematically required 0 in between. Back then in Europe, zero was not considered a number. So, for instance, the year we now call 3 BC, is actually 2 numerically speaking.
Second, Dionysius accepted the statement of Clement of Alexandria that Jesus was born in the 28th year of the reign of the Roman emperor Caesar Augustus. But Dionysius failed to realize that during the first four years of his reign this Roman ruler was known by his original name Octavianus, until the Roman senate proclaimed him "Augustus." So here alone we have an error of four years, but by the time it was realized our chronology was too well entrenched to be changed.
An interesting article from an astronomy website. So when exactly was Jesus born then, (if he was at all), and have we just celebrated the Millennium too late or too early?