The energy-rich country has placed the 11 million-dollar tree, whose value comes from the over 130 gold, sapphire and diamond decorations that adorn it, in the opulent Emirates Palace hotel.
Hotel manager Hans Olbertz told Dubai's Gulf News the aim was to create a "unique tree and experience for our guests this year."
Christmas is commonly celebrated in Abu Dhabi, due to the large number of tourists and the expatriate population that fuel celebrations.
The hotel is considering bidding for Guinness World Records status as most expensive Christmas tree, according to Olbertz.
The current title for most expensive tree, cited on the Guinness website goes to a tree in Tokyo, Japan in 2002 which had a value of $10.8 million dollars and decorated with 83 pieces of jewellery.