The character of Mr. Chips provides much of the book's humor. He has a pronounced sense of fun and a remarkable ability to see the funny side of life despite his various personal tragedies. It is this character trait of his which endears him more than anything else to his pupils. Although they deeply respect Mr. Chips, they also warm to him due to his boyish sense of fun. Chips quickly earns a reputation as a jester, and jokes are always expected of him.

The downside is that he tends not to be taken all that seriously by certain members of staff, so never quite attains the heights that might have been expected of him. His reputation as a jester helps sour his relationship with the new headmaster, who also regards Chips as a bit of a dinosaur for resisting his innovations at the school.

More seriously, Mr. Chips's humor proves to be a real boost for morale during World War I when a number of masters and old boys alike are killed on the field of battle. Chips himself has experienced great personal loss in his life, not least the death of his wife Katherine in pregnancy. Yet, despite that, he still retains a generally cheerful outlook on life, displaying a sunny optimism that is veritably contagious. Even on his deathbed, the old man still finds time to crack a joke:

"I thought I heard you—one of you—saying it was a pity—umph—a pity I never had—any children . . . eh? . . . But I have, you know . . . I have . . . [. . .] Yes—umph—I have," he added, with quavering merriment. "Thousands of 'em . . . thousands of 'em . . . and all boys."