The text of the story purports to have been discovered "among the papers of the late Diedrich Knickerbocker." The titular "legend" is set in 1790 in the countryside near the former Dutch settlement of Tarry Town, in a secluded glen known as Sleepy Hollow. It relates the tale of Ichabod Crane, a lean, lanky, superstitious schoolmaster from Connecticut, who receives room and board from the residents of Sleepy Hollow in exchange for educating their children. Ichabod intends to woo Katrina Van Tassel, the daughter of a wealthy farmer, in order to procure her family's riches for himself. He competes for her affection with Abraham "Brom Bones" Van Brunt, the town rowdy. Unable to goad Ichabod into fighting for Katrina's hand, Brom instead wages a campaign of harassment against the schoolmaster, plaguing him with a series of pranks and practical jokes.
One autumn night, Ichabod is invited to attend a harvest party at the Van Tassel homestead. He dances, partakes in the feast, and listens to ghost stories told by other partygoers. In particular, Brom tells the story of how he once raced against the Headless Horseman of Sleepy Hollow, the notorious ghost of a Hessian trooper decapitated by a cannonball during the Revolutionary War. The Horseman is supposedly buried in a churchyard in Sleepy Hollow and rises from his grave every night to search for his missing head, but is supernaturally barred from crossing a wooden bridge that spans a nearby stream.
Ichabod propositions Katrina, but she rejects his advances. He leaves the party heartbroken and rides home on a temperamental plow horse named Gunpowder. It is the witching hour, and with his mind preoccupied by the ghost stories he heard earlier that evening, Ichabod sees ghouls and goblins at every turn. He encounters a cloaked rider upon a black horse, and - on spotting the rider carrying his own head atop his saddle - recognizes him as the Headless Horseman. Ichabod rides for his life, desperately spurring Gunpowder down the Hollow. The Horseman gives chase and pursues Ichabod all the way to the wooden bridge, where he suddenly rears back and throws his severed head, knocking Ichabod off his horse.
The next morning, Gunpowder is found grazing at his master's gate. No trace of Ichabod is found except for his discarded hat and the remains of a shattered pumpkin. With his romantic rival missing and presumed dead, Brom marries Katrina. While the true nature of the "Headless Horseman" is ultimately left open to interpretation, it is implied to have been Brom all along, playing yet another malicious prank on Ichabod by disguising himself as the Horseman and using a jack-o-lantern as a false head; Brom is said to "look exceedingly knowing" whenever the story of Ichabod's disappearance is told, and always laughs heartily at the mention of the broken pumpkin.
Years later, a local farmer returns from a visit to New York and reports that Ichabod is alive and well. Humiliated by Katrina's rejection and frightened by his encounter with the Headless Horseman, Ichabod fled Sleepy Hollow, moved to "a distant part of the country," studied law, entered politics, and eventually became a judge. However, the old Dutch wives - "who are the best judges of these matters" - still insist that Ichabod was "spirited away" by the Headless Horseman. After Ichabod's disappearance, his students are sent to another school. The deserted schoolhouse where he once taught is left abandoned, and is rumored to be haunted by Ichabod's spirit; it is said that, on quiet summer evenings, his voice can often be heard "at a distance, chanting a melancholy psalm tune among the tranquil solitudes of Sleepy Hollow."
In a postscript, omitted from some editions of the story, Knickerbocker describes how he first heard the tale shared by a storyteller at a public meeting in New York. When one of the men in attendance remarks that he has doubts about certain aspects of the legend, the storyteller replies, "Faith, sir, as to that matter, I don't believe one half of it myself."
