Stephen Crane is known for his creation of stories about regular people, who experience extraordinary events for a brief time in their lives. The Blue Hotel is an excellent example of this. One of the reasons his audience is so varied (from learned scholars to more common folk who enjoy pulp fiction) is that his characters themselves are so varied. If one picks up almost any of his stories, there is at least one character with whom he or she can identify.

The book traces the fears of five men during a winter in the late 1800's and takes place in a small Nebraska town in a space of less than twenty-four hours. Sometimes called a study in fear, it is full of the harshness of the old west, and will appeal to anyone who enjoys rough-hewn excitement. Being accused of cheating at cards, a young man must defend his personal identity. His father must give up some protection of his son, and a Swede must prove his worth. The tensions created by this scenario come to a head, when the two must fight to prove they are worthy of the reputations of the West. After the battle is decided, the final duel with fear proves to be the most significant of them all.

The Palace Hotel in Fort Romper, Nebraska, is known by most people as the Blue Hotel, owing to the fact that its proprietor, Pat Scully, painted it a color much like that of a blue heron.

Pat meets the train as it arrives twice daily, luring its passengers to his establishment. One day he gets and Easterner, a Swede, and a cowboy to follow him back to the hotel as potential guests. Arriving on a very cold, snowy, winter day, they are met in the front room of the hotel by Scully's son, Johnnie, and a grey whiskered local farmer who are playing cards around a large wood stove.

Soon Scully and his three new guests join them around the bright yellow glow of the fire. The Swede has been very quiet most of the time until he suddenly asks the unusual question of how many men have been killed in the room. Scully's son, Johnnie, is somewhat amazed by that, as he has no idea what the Swede is talking about.

The Swede becomes uncomfortable with the people and the atmosphere at the hotel, thinking in his own mind that the people are banding together to kill him. Deciding to leave, he begins packing his things when Scully finds him in his room. Not wanting to lose a paying guest, Scully gives him a drink of whiskey that he has hidden, and the Swede has a change in attitude and decides to stay. After drinking the alcohol, his personality changes drastically, and he becomes boisterous as he returns to the fire to join the others.

After the evening dinner, the card game resumes with Johnnie and the Easterner teamed as partners against the Swede and the cowboy. After a short time, the Swede accuses Johnnie of cheating, a very serious accusation during the late 1800's. They are unable to settle their differences, and finally decide to go out into the blizzard and fight it out with their fists.

At first the battle is close, however, eventually the Swede defeats Johnnie rather soundly. Scully, who acted as referee during the scuffle, helps his son back into the hotel as the Swede is in his room packing to leave.

Working his way into town through a snowstorm, the Swede arrives at a saloon and enters. There are few people inside, just a bartender, and four men talking quietly at a table in towards the back of the room. They consist of two businessmen, the local District Attorney, and a local, professional gambler who has proven to be reputable.

The Swede begins to drink whiskey, and finally tells the bartender that his facial wounds are from a fight with the Blue Hotel proprietor's son, and that he beat Johnnie up pretty badly. The others try to ignore him, which causes the Swede to get mad and begin to demand that they drink with him. Everyone quietly refuses.

Finally, he walks to the table where the four men are talking amongst themselves and puts his hand on the gambler's shoulder. The gambler politely asks the Swede to remove his hand, but the Swede grabs him around his neck. With that, the gambler quickly pulls out a knife and stabs the Swede. Everyone leaves the saloon, and the Swede is left alone and dead on the floor.

Several months pass, and the cowboy is in Dakota Territory, when the Easterner arrives with some mail and a newspaper. He announces that the gambler got three years in jail for the killing. The two argue briefly as to the justice in that, and finally the Easterner tells the cowboy that Johnnie was in fact, cheating just as the Swede accused him. The cowboy blames the bartender in part because he did not stop the altercation before it got out of hand. However, the Easterner says that blame should be put on all the people involved in the events of the day, as they did not pay attention to what was coming and didn't try to stop the fight. With that, the cowboy laments, "Well, I didn't do anythin', did I?"