The murder takes place deep within the catacombs, where the narrator lures the unsuspecting Fortunato, by telling his nemesis (we never know exactly what Fortunato has done to so enrage the narrator) that he has a bottle of rare and  allegedly prized wine. 

For me, the creepiness begins immediately, but as the narrator leads his victim further into the earth, one has to wonder why Fortunato isn't similarly distressed, even if he is drunk.  Here as an excerpt (you can access the full text by following the link below):

At the most remote end of the crypt there appeared another less spacious. Its walls had been lined with human remains, piled to the vault overhead, in the fashion of the great catacombs of Paris. Three sides of this interior crypt were still ornamented in this manner.

Later, as Fortunato is sealed in his tomb, the narrator describes the panic and horror of his prey: 

A succession of loud and shrill screams, bursting suddenly from the throat of the chained form, seemed to thrust me violently back. For a brief moment I hesitated - I trembled. Unsheathing my rapier, I began to grope with it about the recess : but the thought of an instant reassured me. I placed my hand upon the solid fabric of the catacombs, and felt satisfied. I reapproached the wall. I replied to the yells of him who clamored. I re-echoed - I aided - I surpassed them in volume and in strength. I did this, and the clamorer grew still.