Fortunato's fool's hat and costume could be interpreted as symbolizing the way Montresor thinks of Fortunato. Montresor believes that he has fooled Fortunato—that he has fooled everyone, really. He claims that he had "given Fortunato [no] cause to doubt [his] good will," though he now plots the man's complete destruction, and his plan is to exploit Fortunato's pride, his "weak point." Montresor will use Fortunato's pride to lure the man into the Montresor family catacombs under the pretense of needing Fortunato's expert opinion on a recent wine purchase. He will make a fool of Fortunato, and he will do it in such a way that Fortunato realizes that he has been made a fool.
With Montresor's skillful manipulation of Fortunato, his own servants, and any potentially prying eyes that might see Fortunato with a man wearing only a dark mask and long, black cape, he seems to think that he is smarter than just about everyone. And maybe he is. He does tell his audience that, according to his own ideas about revenge, he "must not only punish [Fortunato], but punish with impunity." Montresor believes that he has created the perfect crime for which he will incur no negative consequences or punishments. To him, I think, he has made clowns of everyone, and he believes that he is the only truly wise person.
However, we know that Montresor is telling this story some "fifty years" after he killed Fortunato, telling it to someone who "well know[s] the nature of [his] soul"—perhaps a priest. He admits that he "struggled with [the] weight" of the final stone to be fitted before Fortunato's body, even that his "heart grew sick" as he completed his work. Montresor seems to describe and to unknowingly exhibit signs of guilt, meaning that he has not escaped all negative consequences of his crime nor truly achieved successful revenge, based on his own standards. He thought that Fortunato was the clown, but perhaps he has actually made a "fool" of himself as well by believing that a guilty conscience would not catch up to him.
Like just about everyone at carnival time, Fortunato has dressed up in an elaborate costume. In his case, the costume is that of a fool or jester, complete with a cap and bells. As we will discover, this is an entirely appropriate costume for Fortunato because he shows himself to be a bit of a fool in making the life-ending decision to go with Montresor down to the cellar to taste a glass or three of the finest Amontillado.
In luring his arch-enemy down to the cellar, Montresor plays upon Fortunato's high self-regard. Fortunato fancies himself as something of a connoisseur when it comes to fine wine, and Montresor knows that he'd like nothing better than to show off his extensive knowledge of the subject.
Whatever Fortunato may think of himself, however, his wearing of the fool's costume reminds us of what he's really like as a person. However impressive his knowledge of fine wine may be, he's still a fool, and his foolishness will ultimately cost him his life. Fortunato is characterized not so much by what he says, but by what he does—and what he does is wear a fool's costume and make the foolish, fateful decision to accompany Montresor down to the cellar that will be his final resting place.
The jester's costume that Fortunato is wearing helps the reader to visualize this man. The cap with jingling bells attract attention to him. Ordinarily this might be considered a problem for Montresor, who does not want people to remember that they saw him with Fortunato when it is discovered that Fortunato is missing. But Poe understood that the more attention Fortunato attracted, the less attention would be paid to his companion Montresor, who was dressed in black and wearing a black cape. Although the Montresor family must have lived in Venice for some time, Montresor, whose name is obviously French, apparently does not consider himself Italian. He shows this early in the story in the way he seems to distance himself from Italians:
Few Italians have the true virtuoso spirit. For the most part their enthusiasm is adopted to suit the time and opportunity....In painting and gemmary, Fortunato, like his countrymen, was a quack...
Montresor is not wearing a costume and is not participating in any way in the carnival. He is practically invisible among all the colorfully dressed throngs of Venetians. He must seem like a shadow beside the flamboyant and raucous Fortunato. When inquiries about Fortunato are made, there will be many people who remember seeing him. But no one will remember seeing whether there was anyone with him.
Poe may have also intended Fortunato's costume to characterize him as a fool, but I believe Poe's main purpose was to make him so conspicuous that he made Montresor seem like a shadow.
The story takes place, according to our unreliable narrator, during the "extreme madness of the carnival season," when people wore costumes and disguises and there was a licensed misrule that dominated society. What is so clever about Poe's choice for Fortunato's costume is that is foreshadows how he is going to be deceived and taken in, and how cunning Montresor's manipulation of him is. Note how he is described when he is encounted by Montresor on that fateful evening, that is to be his last:
The man wore motley. He had on a tight-fitting parti-striped dress, and his head was surmounted by the conical cap and bells. I was so pleased to see him that I thought I should never have done wringing his hand.
Fortunato is dressed as a fool, which is emphasised by the jester's "conical cap and bells." What is so ironic about this costume is that Fortunato's costume is truer to his character than he thinks, as he indeed shows himself to be the archetypal fool in the way that he trusts Montresor so quickly and yields to his suggestion to go and taste the Amontillado. He is seduced by his own arrogance and belief in his superiority when it comes to wine tasting, and this, unknowingly, allows Montresor to get the better of him. His dress as a fool is therefore completely suitable, as a fool he shows himself to be.