After a failed business venture with his brothers, Irving filed for bankruptcy in 1818. Despondent, he turned to writing for possible financial support, though he had difficulty thinking of stories to write. He stayed in Birmingham, England with his brother-in-law Henry Van Wart. The two were reminiscing in June 1818 when Irving was suddenly inspired by their nostalgic conversation. Irving locked himself in his room and wrote non-stop all night. As he said, he felt like a man waking from a long sleep. He presented the first draft of "Rip Van Winkle" to the Van Wart family over breakfast.
"Rip Van Winkle" was one of the first stories Irving proposed for his new book, The Sketch Book of Geoffrey Crayon, Gent.. Irving asked his brother Ebeneezer to assist with publication in the United States. As Irving wrote, "I shall feel very anxious to hear of the success of this first re-appearance on the literary stage – Should it be successful, I trust I shall be able henceforth to keep up an occasional fire." 2000 copies of the first octavo-sized installment which included "Rip Van Winkle" were released on June 23, 1819, in New York, Boston, Baltimore, and Philadelphia, published by Cornelius S. Van Winkle and sold at a somewhat expensive 75 cents. A British edition was published shortly after by John Miller, who went out of business immediately after. With help from friend Walter Scott, Irving was able to convince John Murray to take over British publication of the Sketch Book.