Mr. James Dillingham Young ("Jim") and his wife, Della, are a couple living in a modest flat. They each have one possession in which they take pride: Della's beautiful long, flowing hair and Jim's shiny gold watch, which had belonged to his father and grandfather.

On Christmas Eve, with only $1.87 in hand, and desperate to find a gift for Jim, Della sells her hair for $20, and eventually finds a platinum fob chain for Jim's watch for $21. Happy to have found the perfect gift at last, she runs home and begins to prepare dinner.

When Jim comes home, he looks at Della with a strange expression. Della then admits to Jim that she sold her hair to buy him his present. Jim gives Della her present—an assortment of expensive combs for her hair. Della then shows Jim the chain she bought for his watch, which Jim has sold to get the money to buy her combs. Although Jim and Della are now left with gifts that neither one can use, they realize how far they are willing to go to show their love for each other, and how priceless their love really is.

The Gift of the Magi is a short story written by O. Henry (a pen name for William Sydney Porter), about a young married couple and how they deal with the challenge of buying secret Christmas gifts for each other with very little money. As a sentimental story, the plot and its "twist ending" are well-known, and the ending is generally considered an example of situational irony.

William Sydney Porter (September 11, 1862—June 5, 1910), known by his pen name O. Henry, was an American writer. O. Henry's short stories are known for their wit, wordplay, warm characterization and clever twist endings. The best known ones are A Service of Love, The Cop and the Anthem, The Furnished Room, The Gift of the Magi and The Last Leaf, which help him win fame abroad.

O. Henry's stories are gems of their kind; mellow, humorous, ironic, ingenious and shot through with that eminently salable quality known as 'human interest.'" —Bennet Cerf and Van Cartmell