According to The Sun, the boyband has recorded a holiday single as part of the new "Most Wanted - The Greatest Hits" album, which features their best-loved tracks and first new music in seven years.
The group may be hoping to top the U.K. charts with the tune, but there's tough competition as Elton and Ed are set to team up for a seasonal single of their own.
Ed confirmed the collaboration in an interview with NME and Elton was quick to confirm the pair are hoping to knock LadBaby from securing the top spot for a fourth consecutive year.
"He let the cat out of the bag, didn't he? I was sworn to secrecy and then big-mouth f**king Sheeran goes to the Netherlands," he laughed.
"It's supposed to come out - we haven't finished it yet, so there's still work to be done."
Elton added, "We've got the sausage roll man to deal with. He seems to have the monopoly on Christmas records. Good for him."
Elton John and Ed Sheeran are close friends and the Rocketman considers the "Lego House" singer his "eldest son in a way."
"We play each other music and we cheer each other up when we're down in the dumps and it's a lovely thing. A friendship that's blossomed so beautifully."