“The Gift of the Magi” takes place on Christmas Eve during the early 1900s in a shabby eight-dollar flat in the city. It is the story of young lovers, Della and James Dillingham Young who, though poor, are blessed in their love and regard for one another. Each character, yearning to give a worthy Christmas gift to the other, sacrifices his only possession of value to that end. Della's most outstanding trait and source of pride is her hair, a mane described as so magnificent that it would inspire envy in the Queen of Sheba. Having been unable to save enough money to buy her husband a gift, Della sells her hair for twenty dollars, which she uses to buy a beautiful platinum fob chain for her husband's most prized possession, his grandfather's gold watch. Della is unaware that the watch, described as grand enough to rival the treasures of King Solomon, had also been sold that day, enabling Jim to purchase a set of jeweled tortoiseshell combs for Della's wonderful hair.
The Youngs are typical O. Henry characters: the vagabonds, shop girls, cowboys, and minor criminals who suffer poverty, hunger, and loneliness. Yet despite their circumstances, these figures tend to accept rather than bemoan their humble situations while maintaining a belief that all will be for the best. O. Henry's stories are famous for their ironic conclusions, as evidenced in “The Gift of the Magi.” The allusions to the Queen of Sheba and King Solomon add to the humor of the tale, while the description of the couple's meager circumstances and innocent love provide pathos. Thematically, in this story, as well as in most of his work, O. Henry demonstrates that even the most insignificant of us has a story to tell and, as spokesman for the underdog, he relates his tales with humor and compassion.