O. Henry's short story “One Thousand Dollars” opens with a brief and polite conversation between a young man and a lawyer. The lawyer offers the young man one thousand dollars, his apparent inheritance from a recently deceased uncle. “Young Gillian,” the young man in question, chuckles at the peculiar and specific amount of his inheritance. He marvels that, had his uncle bestowed a much larger or a much smaller amount of money upon him, he would better understand the bequest. As it stands, however, he is puzzled and stunned by the legacy of one thousand dollars exactly.

Mr. Tolman, the lawyer, gives young Gillian the money and further explains the conditions of his uncle’s will. The will stipulates that the young man must spend the money and bring receipts of his purchases to the lawyer’s office. In fact, he must account for the manner in which he spends every penny of the inheritance. The young man, still astonished by his uncle’s final bequest, leaves the lawyer’s office and goes to his club.

Upon entering the club, young Gillian approaches a fellow member, Old Bryson, and asks him for advice. He explains that his uncle, who was reportedly worth nearly half a million dollars, left him only a one thousand dollar inheritance. He asks Old Bryson for advice on exactly how to spend the money.

Old Bryson questions him about the remainder of his uncle’s fortune. Young Gillian explains that his uncle left a sizable portion of his fortune to science, particularly the study of bacteria. He also states that his uncle’s servants, “the butler and the housekeeper,” will each inherit $10 and a ring. His uncle’s ward, a Miss Hayden, will inherit an identical legacy. Old Bryson reminds him that his uncle always indulged him financially and that he had never before been a cautious spender. Young Gillian acknowledges the truth of the statement, referring to his uncle as “the fairy godmother” of generous allowances. Still, he is dismayed by the pittance of an inheritance that he receives from his uncle’s estate. In his dismay and disbelief, he again asks Old Bryson how he should spend the one thousand dollars.

Old Bryson sarcastically offers several possible uses for the money. For instance, he suggests that young Gillian could purchase a home and live a modest life. He could also purchase enough milk to supply one hundred hungry babies for a month. He could quickly waste it in half an hour at “one of the fortified art galleries” or by leasing Madison Square Garden for the evening. Finally, he recommends that young Gillian spend the money on the purchase of a diamond pendant for “Miss Lotta Lauriere.” Young Gillian observes that this final request is just silly enough and just expensive enough to remedy his problem. He leaves the club with the intention of purchasing the diamond pendant for the full one thousand dollars. In this manner, he reasons, he will have solved the problem quickly and finally.

Young Gillian calls for a cab and instructs the driver to take him to the Columbine Theatre, where he hopes to see Miss Lotta Lauriere. When he arrives, however, she is hurriedly preparing for her entrance onto the stage. He asks her to pause and offers to give her a pendant. She replies that Della Stacey, an associate, had recently worn a Tiffany’s necklace that cost “twenty-two hundred dollars.” Young Gillian realizes the senselessness of his offer to Miss Lotta Lauriere, and, as she is called to the stage for the opening chorus, he again enters the cab and departs he theater.

Once inside the cab, he asks the driver how he would spend one thousand dollars. The driver immediately launches into a plan (that he has apparently long-held) for the purchase of a saloon. Young Gillian becomes absorbed in his thoughts and ignores the driver. A short distance later, he exits the cab and approaches a blind man on the street who is selling pencils. He poses the question to him, asking how he should spend one thousand dollars. Surprisingly, the blind man shows him his bank deposit book, in which there is “a balance of $1,785 to the blind man’s credit.” Young Gillian leaves the blind man and returns to his uncle’s attorney.

Young Gillian, inquisitive about his uncle’s wishes, asks the attorney if Miss Hayden, his uncle’s ward, was provided anything more than the $10 inheritance. The attorney assures him that she was not. Consequently, young Gillian leaves the lawyer’s office and goes to his uncle’s estate, where he finds Miss Hayden with teary eyes, writing letters. He informs her that there was a codicil to his uncle’s will and that she inherited an additional one thousand dollars. He gives her his money and tells her that he loves her. She only responds, “I’m sorry.” Young Gillian then sits to write an account of how he spent the money, explaining that he gave it all to Miss Hayden because she deserved it. Then, he sealed the note in an envelope and left for the lawyer’s office.

When he arrives at the lawyer’s office, the lawyer opens a safe and takes out a sheaf of papers. He explains to the young man that his uncle has willed him an additional $50,000 if he spent the money wisely or virtuously. On the other hand, if the money was wasted or spent in the pursuit of vice, the $50,000 will be bestowed upon young Miss Hayden. In response to this new information, young Gillian snatches his receipt from the lawyer’s desk and tears it to shreds, deceitfully informing the lawyers that he wasted the one thousand dollars while gambling. The lawyers are sad to hear his news, but puzzled by the sound of his laughter as he departs the office building.