In total 1,254 took part in the event in Calne, Wiltshire, which also included live animals.
Everyone who turned up had to be in full fancy dress to be counted and they had to actually take part and not just be an audience.
There were hundreds of shepherds, wise men and fairies.
The previous record was set by 1,039 volunteers in the United States back in December 2014.
Organiser Rachel Rounds from the Bible Society told Premier they were "on tenterhooks" waiting to discover if they had broken the record.
Each cast member was counted three times by officials from Guinness World Records before they declared the record broken at the town hall.
Rounds told Premier they did it to "connect people with the true meaning of Christmas because that often gets lost in father Christmas and Christmas presents".
She said that local churches had all been involved with one Christian woman creating 60 sets of angel wings to help the effort.
Speaking of the moment she found out the record had been broken she said: "I burst into tears, I was a bit emotional at that point but it was just wonderful to see the Bible story told to, as it turned out, 1,254 people."
Rachel Rounds speaking to Premier's Antony Bushfield:
