Short of money on Christmas Eve, Della Young sells her long, beautiful hair so she can buy a present for her husband, Jim Young. She then spends several hours shopping to find the perfect gift—a chain for his gold watch. She returns home, fixes up her hair, and greets her husband when he arrives from work. He gives her his gift, tortoiseshell combs, which she can no longer use because her hair is too short. She shows him her gift, a chain for his watch, which he can no longer use because he sold his watch to buy her the combs. Jim comforts Della, and she prepares their dinner.
Twenty-two years old, Jim Young supports himself and his wife on a low-paying job. This leaves him little money for discretionary spending. He sells a family heirloom, his gold watch, to obtain money to buy his wife, Della Young, a Christmas present. When he comes home from work on Christmas Eve, he sees his wife has cut her hair and the combs he purchased for her are no longer useful. Della gives him her gift, a chain for his watch, which is also useless because he has sold it to buy her the combs. He calmly acknowledges their situation but refuses to be ruffled or upset by it.
Madame Sofronie is the owner of Hair Goods of All Kinds. Brisk and unemotional, she is practiced at the act of exchanging money for hair and buys Della's hair for $20.