"The Devil and Tom Walker" takes place in a relatively realistic setting, despite the fact that there are several supernatural events that occur. The very first paragraph describing the gloomy and slightly eerie swamp incorporates tales about Kidd the Pirate and mentions that the Devil also has been rumored to live here; however, the reader can probably assume at this point that this is simply local folklore. As the story progresses, however, the supernatural events continue and become more important to the plot. For example, while walking through the woods, Tom Walker comes upon the Devil and has a brief, surprisingly logical conversation with him. When he ultimately decides against making the deal, his wife actively pursues the Devil and ends up missing, probably taken by the Devil because of her difficult manner and personality. The narrator states:
She had probably attempted to deal with the black man as she had been accustomed to deal with her husband; but though a female scold is generally considered a match for the devil, yet in this instance she appears to have had the worst of it. She must have died game however; for it is said Tom noticed many prints of cloven feet deeply stamped about the tree, and several handfuls of hair, that looked as if they had been plucked from the coarse black shock of the woodsman. Tom knew his wife's prowess by experience. He shrugged his shoulders as he looked at the signs of a fierce clapper clawing. "Egad," said he to himself, "Old Scratch must have had a tough time of it!"
Eventually, Tom makes the deal with "Old Scratch," but begins to falter in his decision as his old age and eventual death quickly approach. He begins to carry a Bible and attend church regularly; however, he does not truly change his ways or his heart. The supernatural makes another appearance in an otherwise "normal" setting at the end of the story:
Tom lost his patience and his piety— "The devil take me," said he, "if I have made a farthing!"
Just then there were three loud knocks at the street door. He stepped out to see who was there. A black man was holding a black horse which neighed and stamped with impatience.
"Tom, you're come for!" said the black fellow, gruffly. Tom shrunk back, but too late. He had left his little bible at the bottom of his coat pocket, and his big bible on the desk buried under the mortgage he was about to foreclose: never was sinner taken more unawares. The black man whisked him like a child astride the horse and away he galloped in the midst of a thunderstorm. The clerks stuck their pens behind their ears and stared after him from the windows. Away went Tom Walker, dashing down the streets; his white cap bobbing up and down; his morning gown fluttering in the wind, and his steed striking fire out of the pavement at every bound. When the clerks turned to look for the black man he had disappeared.
Not only was Tom taken by the Devil, but all of his money and mortgage papers are turned to cinders and his home burns down. Washington Irving uses a combination of realistic and supernatural events to tell the moralistic story of Tom Walker and his quest for money.