This is going to be a real pain, but you need to undecorate it, take it down, cut about 2 inches off of the bottom, and then when you put it back up, water it with *boiling* water (this will open up the trunk so it can receive the water.). Hope this helps!

This is sort of OTsquared, but: most lots where you select trees offer trees that were cut in August. Next year, pack up the family for a trip to a pick-your-own tree farm.

So sayeth the tree farmer's daughter : )

If it's becoming dry it may be too late. Tree rescue attempts would require undecorating, and starting over by sawing another inch off the bottom to get to fresh wood (if there is still some). The inch is the usual recommended amount off the bottom, but if there isn't an extra inch it might be possible to drill into the base (drill up about an inch). Then put it in fresh warm water (make sure the water is in a large container and will hold a gallon or a gallon and a half of water). Let it sop up as much as possible over at least a couple days. If it's still shaggy-looking for a nice tree, it might perk up if left outside as a plainer tree (maybe birdfeeing decorations, ribbons and such). If it perks up, cut off another inch section of trunk and supply the tree with fresh water in its new location. Re-decorate, and cheer (and whatever happens, once the different trunk cuts, and/or drill holes are made fresh make sure the water level is higher in any container because letting it get lower than the fresh wood will cause that fresh wood to seal over and it won't be able to absorb water any more).

It may be too late for rescue. In which case there is a lot of information about different tree types, and how to check for freshness and enhance a cut tree's presence from the start. This page address has urban tree tips and links to info about trees, and how well or not they keep their needles in general.
http://www.urbantext.uiuc.edu/trees/treecare.html

This one has more plain detail and is from Virginia state (most tips would apply anywhere) extension.
http://www.ext.vt.edu/pubs/forestry/420-641/420-641.html

The next two have 'fireproofing' solutions you can use with your tree. They are more 'feeding' and 'making cut plants last longer better' solutions in practical terms though. They might help trees look better longer (they are essentially giant cut plants and being indoors doesn't generally agree with cut plants). Trees that look better longer are also trees that are less likely to be a fire risk.
http://www.rpatrick.com/more/fireproofxmastree/
http://wls.wwco.com/garden/christmastree.html

good luck

I always used to do that with my family, but dh and I moved to Tampa this year, and there's not one for miles around, so I'll have my first pre-cut live tree this year.... very nervous about it, but the advice I gave came straight from my uncle who owns a tree farm as well
(we have lots in common, Kara!)

When I get a pre cut live tree, I will trim off the trunk a couple of inches, let it set in a large bucket of warm water for a day or so, then bring it in. If your tree is really dry and brittle, please do not take a chance, its too easy for them to go up in flames from the slightest spark. Maybe get another one, would not be any more trouble than un-decorating/re-decorating and if your tree is already dry, it will probably not take up any additional water.

Between reponses here and the Holidays forum ,we felt it best to take down the tree. We will go pick a real live tree next year. (We'll make a whole day trip of it). But for this year, we couldn't take the chance with the fire hazard.

Thanks for the responses though! They helped us decide what to do. :)

-Tara W