Steve Dyke, the co-owner of Down Range Indoor Training Center in the city of Chico, commissioned the billboard to catch the attention of drivers travelling along Highway 99 - but some people are not happy about it.
The tooled-up Father Christmas has no jolly smile, is wearing sunglasses, and wields the AR-15 firearm next to the slogan: 'We build AR's for Santa.'
'You know, 'tis the season, so we thought it would be a good idea,' Mr Dyke told CBS. We actually got a kick out of it - thought it would be good and other people would think it was funny.
She said: 'As a teacher, I would not want my students to see that. I don't think you need to put out that as Santa has a gun.'
But Mr Dyke has no plans to take the ad down and says he has received support from customers.
He said: 'Well, you know, some people get toys and stuff like that for Christmas. Other people, when I was growing up, I got guns from Santa Claus.
'I mean, it's just a matter of where you're from.'
The AR-15 was the gun used by 20-year-old Adam Lanza, who killed 20 first grade children and six women at Sandy Hook Elementary School in Newtown, Connecticut, in December 2012.
It was also the firearm used by James Holmes when he killed 12 cinemagoers at a midnight screening of The Dark Knight Rises last July in Aurora, Colorado.
A proposal by President Barack Obama to stop civilians being able to buy rifles such as the AR-15 fell apart even before reaching Congress.
An estimated five million AR-15s are now in civilian hands.
In November it was reported that a gun store that featured an advert with comedy superstar Will Ferrell alongside a controversial assault rifle was ordered to take it down by Hollywood executives.
Family Firearms, in Valrico, Florida, featured an image from the hit 2003 Christmas film, which made more than $220million worldwide, on a flyer for a 'Build-n-AR' event in December, where customers are taught to build and then take home an AR-15 rifle for $895.
But the company which produced Elf was not happy and sent the gun store a cease-and-desist order, reports TMZ.
