There are basically three physical settings, all in New England, which provide the backdrop for Washington Irving's tale "The Devil and Tom Walker." The time is "about" 1727, when New England was a colony of Great Britain and, as Irving reports, the area was beset by earthquakes. One of the physical settings is "a thickly wooded swamp or morass" populated by groves of hemlock trees and a "few scattered oaks." This is the lair of "Old Scratch" as Tom calls him, but is in reality the incarnation of the devil. He lives in these woods and protects the treasure of "Kidd the pirate," buried under a tree many years before the events of the story.

Another setting is Tom Walker's house near the swamp. It is "forlorn-looking" with "an air of starvation." Irving describes it as a sterile place marked by "straggling savin trees." The savin juniper is a low-maintenance shrub and is certainly symbolic of the neglectful ways of Tom Walker since it seems to be the only thing which will grow in the vicinity of his house. The barren nature of the place is further noted by the appearance of Tom's horse, which is "miserable" with "ribs. . . as articulate as the bars of a gridiron." Moreover, the place is referred to as a "land of famine."

After his wife apparently becomes a victim of "Old Scratch," Tom moves to Boston, where he is seen "seated behind his desk in a countinghouse." When he rejects the Devil's request that he become a slave trader, Tom settles on usury and makes his fortune, with the initial capital provided by the Devil, loaning money to Bostonians who are gullible enough to pay the exorbitant interest rates which Tom offers. Finally, Tom is picked up by the Devil and "whisked" off to the "hemlock swamp," which is subsequently hit by a "thunderbolt" and bursts into flames.

The setting of Irving's fictional sketch is New England, a few miles from Boston, Massachusetts, in the early eighteenth century, a historical area settled by Quakers and Puritans where religious piety and fanaticism are prevalent among the citizens. It is around the year 1727, and much of the narrative takes place in a forest primeval, much like Nathaniel Hawthorne's The Scarlet Letter.

Tom Walker, the main character, heads home by taking a shortcut through a swamp filled with quagmires and pits. As he struggles along, Tom becomes exhausted and sits upon a fallen hemlock trunk where he espies the skull of an Indian with a tomahawk buried in it when a strange figure appears before him, neither "Negro nor Indian" and "begrimed with soot" with "great red eyes." This odd figure is known as Old Scratch, and it is with him that Tom Walker deals.

After Tom strikes his bargain with the devil and his wife dies, he moves to Boston where he becomes "a violent churchgoer" because in his old age he worries about the deal he has made with the devil in the swamp.

The good people of Boston shook their heads and shrugged their shoulders, but had been so much accustomed to witches and goblins and tricks of the Devil...that they were not so..horror struck....

There in Boston, Tom comes to his end.