One of O. Henry's signature literary tools, irony is prevalent throughout his short story, "A Retrieved Reformation." In particular, the use of verbal irony, in which words are used to suggest the opposite of what they usually mean, occurs in the following situations:

When Jimmy is called to the warden's office and told that he will be released in the morning, and the warden admonishes Jimmy to "stop cracking safes," Jimmy argues that he has never engaged in this crime.

 “Oh, no,” laughed the warden. “Of course not. Let's see, now. How was it you happened to get sent up on that Springfield job? Was it because you wouldn't prove an alibi (1) for fear of compromising somebody in extremely (2) high-toned society? Or was it simply a case of a (3) mean old jury that had it in for you? It's always one or the other with you (4) innocent victims.”

In his response to Jimmy, the warden's words are extremely ironic as he clearly does not believe Jimmy's contention that he is innocent of the charges for which he has been put in prison. 

1. "for fear of compromising somebody" really means "You would not tell on yourself and had no one to accuse."
2. The "high-toned society" in which Jimmy moves is anything but that; he has been with the criminal element.
3. "the mean old jury that had it in for" Jimmy simply dealt justice, but often criminals place blame on someone else.
4. Criminals almost always claim they are "innocent victims."

In these four examples, it becomes clear that Jimmy has a criminal mentality that has not been altered by his stays in prison.

In another situation, O. Henry as narrator uses verbal irony when he states that once released from the confinement of prison, Jimmy pays no attention to the beauty of nature which he has missed--

Disregarding the song of the birds, the waving green trees, and the smell of the flowers,--

but instead goes immediately to a restaurant where there he

(5) tasted the first sweet joys of liberty in the shape of a broiled chicken and a bottle of white wine—followed by a cigar a grade better than the one the warden had given him.

5. Here O. Henry humorizes about the personality of Jimmy Valentine who has no appreciation for the beauty of nature, but, instead, finds a "broiled chicken, wine, and a fine cigar" as higher joys than the loveliness of the real world around him. This irony acts as a surprising prelude to Jimmy's emotional reaction to Annabel Adams and his loving her so much that he wishes to actually reform his life as the warden has urged him. 

Thus, the verbal irony in O. Henry's narrative adds to the point that love can effect great transformations in people, even "hardened" criminals such as Jimmy Valentine.