Irony is a literary device that creates a contrast between appearance and reality, and O. Henry uses this device throughout his work. “One Thousand Dollars” has irony at its center. Based on Gillian’s past behavior and reputation, the characters in the story expect him to waste the money on something frivolous. His choice to give the money to Miss Hayden, and then to pretend he lost it gambling so she would receive more, is a doubly ironic plot twist. Not only does Gillian behave differently than anyone expects, but he also hides his generosity by lying about the money.

O. Henry sets the stage for Gillian to tell Tolman that he gave the money to Miss Hayden, and thus receive $50,000, but he chooses to lie so that she receives the money instead. This turn is unexpected to the reader and creates situational irony. Moreover, throughout all of this, O. Henry uses dramatic irony as the audience is aware that Gillian gave the money to Miss Hayden while Tolman is not, and the lawyers are aware of the stipulation in the will while Gillian is not.