The story opens with a note that it has been found among the possessions of the “late” Diedrich Knickerbocker, who is the narrator of “Sleepy Hollow.” Knickerbocker describes the setting, the quiet, bucolic “Tarry Town” in upstate New York that time seems to have passed by. A few miles from town is a small village called “Sleepy Hollow” which has a somnolent, bewitching quality: all the inhabitants, and indeed anyone who stays in the village for awhile, are prone to see visions and ghosts. The townspeople, most of whom have Dutch heritage, love to gather and tell supernatural tales. One of their favorites is of the Headless Horseman, an old Hessian trooper whose head was shot off during the Revolutionary War, and who gallops off in search of it each night.
One of those “tarrying” in Sleepy Hollow for a time is our protagonist, Ichabod Crane, a schoolteacher from Connecticut. Ichabod, tall and lanky with a voracious appetite, is stern and strict in the schoolhouse but can be shrewd and ingratiating when it suits him, such as at the farmhouses of the students where he lodges. He leads the psalm singing lessons at church and enjoys flirting with the young women, who admire him for his intellectualism. He also enjoys gathering with the old Dutch wives to hear ghost stories and to tell his own, many of which come from Cotton Mather’s “History of New England Witchcraft,” his preferred book. On his way home, however, Ichabod is also spooked by the stories he’s just heard, and every rustle and chirp terrifies him.
One of Ichabod’s students is Katrina Van Tassel, the daughter of a wealthy Dutch farmer, Baltus Van Tassel. Ichabod is initially attracted to Katrina for her beauty and coquettish nature, but he falls headlong in love with her once he visits her at her father’s farm and sees the culinary abundance that would await him if he managed to win her heart. Ichabod is initially confident in his ability to win over Katrina. However, many other rivals are competing with him—in particular, the brawny, clever, and mischievous Brom Bones, who wanders the villages looking for trouble with his gang of sidekicks (though all in good fun). Ichabod knows he’s no match for Brom Bones physically, so he avoids confronting him. For a time, both of them continue on their courtship of Katrina separately, and while Brom Bones plays several practical jokes on Ichabod, neither of them seems to gain the upper hand with Katrina.
One autumn afternoon, Ichabod is teaching at his schoolhouse when he receives an invitation to a quilting frolic at Baltus Van Tassel’s estate that evening. Thrilled and nervous, he spruces himself up and even borrows a horse, Gunpowder, from the ornery old farmer Hans Van Ripper. Initially, the party seems to go well. Ichabod gorges himself on all the food, and manages to dance with Katrina all night while Brom Bones sulks and fumes. Towards the end, everyone begins to tell ghost stories, especially of the Major André, who was taken prisoner during the war, and of the Headless Horseman. Ichabod lingers afterward to talk to Katrina as the other guests begin to leave. Nevertheless, though Knickerbocker doesn’t mention exactly what happened, Ichabod leaves the Van Tassel farm shortly afterward looking crestfallen.
As Ichabod rides Gunpowder back home, he begins to think of all the tales of horror he has just heard at the party. He approaches the tree near to where Major André was captured and, though terrified, slips under it safely. But as he nears the stream where Major André was taken prisoner, in a place called Wiley’s Swamp, he catches sight of a massive, shadowy figure on horseback. Ichabod calls out “Who are you?” but receives no answer, and quickens the pace of Gunpowder, while the figure follows behind him. At one point, the two riders climb a hill and Ichabod realizes that the figure is headless—it must, he thinks, be the Headless Horseman of the famous story. He rides faster and faster, at one point losing Gunpowder’s saddle and fearing how angry Hans Van Ripper will be. But he continues riding, attempting to reach the church where, according to the tale, the Horseman will vanish. But as he crosses the bridge, the Horseman hurls its head at Ichabod, who crashes to the ground.
The next day Ichabod is missing, and a search party eventually finds the fallen saddle and horses’ hoof tracks next to a smashed pumpkin. Some time later, an old farmer returns from New York with the news that Ichabod had run from the village from fear and to escape Katrina’s rejection but had become a successful lawyer and judge. The Dutch wives, however, insist that the Headless Horseman carried him off.
In the postscript, Knickerbocker claims that he heard this story at a business meeting in New York. After its end, one elderly gentleman had asked the storyteller what the story meant. The storyteller responded with a confusing, nonsensical logical syllogism, and the gentleman claimed he still doubted the story’s veracity. At that point, the storyteller claimed he didn’t believe half of it himself.