It brings together over 40 designers, makers and vintage sellers from the internationally renowned website Etsy.
The marketplace, where people can set up virtual shops to sell their handicraft, announced it was looking for venues to host Christmas fairs for their Etsy Made Local initiative in August.
Councillor Peter Rankin, leader of Preston City Council said: “A Christmas fair on this scale has never been done before at the market.
“It will be great to see designers and makers from across the region selling alongside our market traders.
“The additional activities and entertainment will add to the weekend, ensuring a festive atmosphere to be enjoyed by all.
“Hopefully the fair will bring a new audience into the market and create renewed awareness too of our existing traders, the products they sell and the plans for the new market.”
Traders will be selling a variety of items including jewellery, prints, chocolates, home accessories, cupcakes and Christmas-themed goods.
With prices starting from £1, there will be something to suit everybody’s budget and taste.
There will also be a children’s film workshop run by Starry Eyed Productions, Santa Claus will be listening to Christmas present wish lists in his grotto and for those who want to brush up on their Christmas cake decorating skills there will be demonstrations at intervals. Free gift wrapping will also be provided.
The Christmas Fair opened yesterday at Preston Markets in Liverpool Street and will run until tomorrow from 10am-4pm.