Shortly after the Revolution, two veterans of that war are relocating their family. While traveling at a slow pace through the woods, they encounter their former commanding officer, Major Lionel Spencer, as well as a strange Scotsman calling himself Macnab. The four men recount stories of the war, though they are confused by the odd behavior of Macnab. Finally, Spencer rides off alone to continue his journey. He reveals that he is the heir to a large fortune in England and intends to sail overseas to claim it, if he can prove who he is.
Later, the younger man of the family James Grayling scouts ahead and is met by the ghost of Spencer, who claims that Macnab has killed him to take his place and steal his inheritance.
"Do not be alarmed when you see me! I have been shockingly murdered... Yes, murdered! ...James, I look to you have to have the murderer brought to justice! James! —do you hear me, James?"
James rides on to Charleston in the hopes of stopping the boat Macnab is taking to England. The local authorities do not believe his ghost story, but agree to search for Macnab anyway. They find him on board, using the name Macleob, and he reveals he fought for the king during the Revolution. All agree he has an air of guilt about him and they search for the body of Spencer to prove he was murdered. Sure enough, they find the corpse in the same spot where James had seen his ghost. Spencer has been beaten to death with the butt of a pistol — the very same pistol Macnab has on him. He is found guilty of murdered and sentenced to death by hanging.
Presented as a story within a story, the tale is recounted by a grandmother to her grandson. Immediately after its telling, her grown son dismisses the supernatural aspects of it and offers his logical explanation, to the disappointment of the young narrator who was listening (presumably the young Simms himself):
I heard my father with great patience to the end, though he seemed very tedious. He had taken a great deal of pains to destroy one of my greatest sources of pleasure. I need not add that I continued to believe in the ghost, and, with my grandmother, to reject the philosophy. It was more easy to believe the one than to comprehend the other.