At the beginning of the story, the setting is a junior high school. The narrator laments the transition from elementary school, where there was one teacher teaching all subjects, to junior high school, where there were several teachers. The narrator proclaims incredulously, "there were teachers now, not just one teacher, teach-erz."
The narrator was also uncomfortable in his new setting because there were girls in the new school, whereas before, there were only boys. There were also new words that the narrator didn't understand. In the narrator's own words, everything about this new setting seemed "backwardlike."
Later in the story, the focus shifts from the setting of the new and daunting junior high school to the safe and more exciting setting of "the arroyo." The arroyo was exciting because it was "the one place [they] were not supposed to go." The narrator and his friends considered the arroyo their "personal Mississippi." It was their "friend from long back... full of stories and all the branch forts" they had built when they were younger. One day, in the arroyo, the narrator and his friends found a cannonball. The friends decided to bury the cannonball, but they were unable to ever find it again.
About half way through the story, the narrator recalls several years ago, when he and his family first moved "away from town" and out to "the wilds," where "everything look[ed] bigger." This new wild place, we are told, was "three miles north of the Mexican border." This new place was surrounded by hills on one side and the aforementioned arroyo on the other.
The narrator then remembers the first time he went to the arroyo, which was during his first summer in the new home. He describes the river that he used to swim in, and he describes the sewage leaks from the treatment plant upstream. In the second summer, because of the sewage leaks, the narrator and his friends decided to spend more time in the hills. Over one of the hills, the friends found "heaven," which the narrator describes as "green, like nothing else in Arizona." In this place beyond the hill, there were "lots of trees," and, the narrator says, "it was like The Wizard of Oz... so green, so emerald."
While they were enjoying this newfound paradise, two men appeared "from around a corner of trees." The men "yelled" at the boys, and, after that, this "heaven" lost its appeal, and the boys returned to the arroyo. The narrator reflects at this moment in the story that "Things get taken away."
The sequence of different settings in "The Secret Lion" reflects the theme of lost childhood innocence. At the beginning of the story, the daunting reality of junior high replaces the innocent paradise of elementary school, and this change of setting reflects the narrator's transition from childhood to adolescence. In the next part of the story, we are told that the refuge of the arroyo was ruined by the sewage leaks and that the paradise of the place beyond the hills was ruined by the intrusion of the two adults. The loss of these two settings, the arroyo and the "heaven" beyond the hills, reflects and emphasizes the narrator's lost innocence and is synonymous with the transition from childhood to adolescence.