Anglican Canon Simon Tatton-Brown also told a gruesome tale of the real Santa’s role in a plot to butcher kids and turn them into ham.
Furious parents at the school, have accused him of ruining their children’s Christmas.
And several have vowed to boycott a Christmas Carol concert at his church.
Linzi Merritt, whose son Levi, nine, attends the school in Chippenham, Wilts, said: “We wouldn’t just walk into the church during one of his services and tell everyone that Jesus isn’t real.”
Canon Tatton-Brown upset dozens of children at Charter Primary School when they were called in for assembly.
He said a pre-planned talk had to be scrapped because of technical difficulties and spoke about the festive season instead.
And he reduced youngsters to tears as he revealed that Santa was a fictional character based on the 4th Century St Nicholas.
He said a myth had built round St Nick as he used to hand out gifts to the poor.
But he added that St Nick used his prayers to bring the victims back to life.
Linzi added: “Loads of kids went home crying – it has ruined Christmas for them.”
Kerry Butler added: “All the parents here are very upset. He’s coming back to the school for the carol concert. After this I don’t understand why he is allowed back.”
Last night Canon Tatton-Brown apologised.
He said: “I didn’t intended to upset anyone or to dispel children’s beliefs in Santa Claus, but I accept I was wrong.
“I understand that people are disappointed. I got it wrong. It wasn’t intentional. I can’t undo it.”
Headteacher Sarah Flack said she had accepted his apology.
