The setting of Midaq Alley is a significant backdrop for a couple of reasons. The first is that it is literally a "dead end." While there is life teeming all around Midaq Alley in terms of Cairo and foreign influence, Midaq Alley does not feature much in way of life within it. The characters who seek to find happiness do not settle for it in Midaq Alley. Hamida is one whose desire for materialism leads her to loathe Midaq Alley. Interestingly enough, the dead end that she hates is what her life becomes once she leaves the alley. Abbas, in love with Hamida, leaves Midaq Alley in order to fulfill his promise to her and in seeking to have her. He dies as a result of this. Throughout the setting of Midaq Alley, life is seen as fundamentally better outside of it with the fast pace of the world around it. The indigenous nature of Midaq Alley might be where the message lies. There has to be a way of finding happiness in Midaq Alley and not merely believing it to be a "dead end" in which there can only be happiness outside of it. The characters who live life in seeing Midaq Alley as a source of disdain and one in which there is no hope are fundamentally unhappy by the end of the narrative.
The ending in which life essentially returns back to normal in Midaq Alley reflects how life, itself, is a "dead end." Individuals must find something lasting and transcendent in a world of contingency and irony. The modern setting is shown as one in which hollow pursuits prove to be the proverbial dead end in all forms of consciousness. The need to establish some level of "spiritual acceptance" and foundation becomes critical for those who exist in Midaq Alley. The setting of the alley might be a dead end, but this dead end is something that exists in the individuals. It is here in which there is a cultural and philosophical statement being made in the setting of the story.