The story is set in the fictional port town of Luktrop, consisting of about "a hundred houses" and "four or five hilly streets". The town is located at the Volsinian coast, between the mountains of Crimma and the "vast Sea of Megalocrida". Near the town is Vauglor, an active volcano. "During the day it sends forth sulphurous vapours; at night, from time to time, great outpourings of flame." The flames of the volcano serve as the town's lighthouse, allowing travelers to locate the port.