The story of Rip Van Winkle is set in the years before and after the American Revolutionary War. In a pleasant village, at the foot of New York's Catskill Mountains, lives kindly Rip Van Winkle, a colonial British-American villager of Dutch ancestry. Van Winkle enjoys solitary activities in the wilderness, but he is also loved by all in town—especially the children to whom he tells stories and gives toys. However, he tends to shirk hard work, to his nagging wife's dismay, which has caused his home and farm to fall into disarray.
One autumn day, to escape his wife's nagging, Van Winkle wanders up the mountains with his dog, Wolf. Hearing his name called out, Rip sees a man wearing antiquated Dutch clothing; he is carrying a keg up the mountain and requires help. Together, they proceed to a hollow in which Rip discovers the source of thunderous noises: a group of ornately dressed, silent, bearded men who are playing nine-pins. Rip does not ask who they are or how they know his name. Instead, he begins to drink some of their moonshine and soon falls asleep.
He awakes to discover shocking changes. His musket is rotting and rusty, his beard is a foot long, and his dog is nowhere to be found. Van Winkle returns to his village where he recognizes no one. He discovers that his wife has died and that his close friends have fallen in a war or moved away. He gets into trouble when he proclaims himself a loyal subject of King George III, not aware that the American Revolution has taken place. King George's portrait in the inn has been replaced with one of George Washington. Rip Van Winkle is also disturbed to find another man called Rip Van Winkle. It is his son, now grown up.
Rip Van Winkle learns the men he met in the mountains are rumored to be the ghosts of Hendrick (Henry) Hudson's crew, which had vanished long ago. Rip learns he has been away from the village for at least twenty years. However, an old resident recognizes him and Rip's grown daughter takes him in. He resumes his usual idleness, and his strange tale is solemnly taken to heart by the Dutch settlers. Other henpecked men wish they could have shared in Rip's good luck and had the luxury of sleeping through the hardships of the American Revolution.