How did the tradition of putting decorations on a Christmas tree start?

To answer this we need to also take a look at where the Christmas tree came from. The Christmas tree came from the Germanic regions. Origionally it was part of a Pagan festival called the "12 Rauhnachte," which means 12 harsh nights. During the winter, the Germanic people observed that everything seemingly died, and turned brown, with the exception of only a few evergreens. They superstitiously blamed evil spirits for causing all the plants to die. The evergreens that stayed alive became a symbol of life and immortality to them, so they included the tree into the festival.

This Pagan ritual occurred during the end of December, through the beginning of January. The tree was brought indoors on Dec 24, and removed on Jan 6. They believed that the life-saving power of the evergreen could protect them and their homes from the evil spirits. Later the tree began to be decorated with fruit and other colorful items.

Somewhere around the 1300's or maybe 1400's, the tree was excepted by the Catholic church as an addition to the Christmas holiday. This was fitting, since the Christmas holiday itself was adopted from another Pagan ritual known as the Saturnalia.

The Saturnalia was a festival to the sun god Mithras, also known as Ra. This festival was winter festival, which occurred at the end of December and celebrated fertility and immortality. Like Christmas, the Saturnalia also included the exchanging of gifts, decorating of homes, and general merry-making.