The story is set just after the Union of Scotland and England (1707), in the Liddesdale hills of the Scottish Borders, familiar to Scott from his work collecting ballads for The Minstrelsy of the Scottish Border. The main character is based on David Ritchie, whom Scott met in the autumn of 1797. In the tale, the dwarf is Sir Edward Mauley, a hermit regarded by the locals as being in league with the Devil, who becomes embroiled in a complex tale of love, revenge, betrayal, Jacobite schemes and a threatened forced marriage. Scott began the novel well, "but tired of the ground I had trode so often before... I quarrelled with my story, & bungled up a conclusion."
Critics and public found it poor in comparison with its popular companion Old Mortality. One of the harshest reviews was in the Quarterly Review, written anonymously by Scott himself.