When O. Henry published ''The Gift of the Magi," his stories were popular with the reading public and critics alike. For the last ten years of his life, and for ten years or so after that, he was hailed as a master of the short story. Critics ranked him with Edgar Allan Poe, Nathaniel Hawthorne, and Bret Harte, and his techniques were taught in creative writing courses.

Although O. Henry's characters are often regarded more as types than as unique individuals—vagabonds, shop girls, criminals, cowboys—critics find them likeable, and the writer's use of detail creates a sense that they are "real people." Della and Jim fit this pattern in that the reader knows little about the details of their personalities or backgrounds—just enough to sympathize with their circumstances. Reviewers also find the story typical of O. Henry in its tight structure, humorous tone, and signature surprise ending. These qualities have kept his stories popular with the reading public, even during times when his work has been out of favor with critics.

Ironically, just when his popularity was at its height, and C. Alphonso Smith published O. Henry's Biography in 1916, critics began to question the value of his work. Some—in particular, Fred Lewis Pattee—dismissed his stories as superficial, false and predictable. The craftsmanship that made tales such as "The Gift of the Magi" compact and pointed fables began to seem mere trickery. His reputation continued to fall throughout the 1920s and 1930s, when Gertrude Stein, James Joyce, Virginia Woolf and other Modernists began to experiment with literary form.

O. Henry's work remained popular among readers, however, and in the 1960s, literary critics began to reassess his work. Today, most critics agree that his short, funny, inventive stories have earned him a permanent place in American literature. "The Gift of the Magi" has earned a niche as one of his masterpieces.