The word Halloween is actually a contraction for All Hallows Eve, which, before the reform of the liturgical calendar, was the vigil of All Saints and All Souls Days. As such, Halloween can be considered a Christian holiday. Like many Christian holidays, the secular world has attached its own traditions to the day (e.g., costumes, trick-or-treating, parties) that are not inherently bad in and of themselves but can be problematic when the religious meaning of the holiday is set aside, forgotten, or ignored.
At its best, Halloween is a reminder of our own mortality and our own need to prepare ourselves to one day face God. The festivities attached to the holiday can, like Mardi Gras for Lent, prepare us for All Saints and All Souls Days, and for the month of November, which the Church has traditionally set aside for remembrance of the souls in purgatory. Christian parents have a variety of options for celebrating the holiday in a Christian spirit and should feel free to pick among those options what works best for helping their families learn the "reason for the season."
Recommended reading:
All Saints Day
All Souls' Day
Is Catholicism Pagan?
How Halloween Can Be Redeemed by Page McKean Zyromski
Holyween: Reclaim the Celebration of All Saints by Fr. Vincent Serpa, O.P.
Smashing Pumpkins by Brian Paul
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"If anyone comes to me, I want to lead them to Him." --St. Edith Stein
sources:
http://forums.catholic.com/showthread.php?t=16564