In 1799, New York City police constable Ichabod Crane is sent to the quaint Dutch settlement of Sleepy Hollow, which has been grappling with a series of gruesome decapitations, including those of a wealthy father and son, alongside a widow. Upon arrival, he is received by the town's elite, including wealthy businessman Baltus Van Tassel, town doctor Thomas Lancaster, the Reverend Steenwyck, notary James Hardenbrook, and magistrate Samuel Philipse. They inform Ichabod of their unsettling belief that the perpetrator is the vengeful spirit of a headless Hessian mercenary, who rides a black stallion in search of his missing head.
Despite his initial skepticism toward the supernatural narrative, Ichabod begins his investigation. He takes up residence with Baltus Van Tassel and his wife, and soon finds himself captivated by their daughter, Katrina. Following the death of another victim, Ichabod takes the young son of one victim, Young Masbath, under his wing. Together, they exhume the bodies on a tip from Philipse and uncover shocking news: the widow was pregnant when she died. Soon after, Ichabod witnesses the Horseman claim Philipse as a victim. With Young Masbath and Katrina, he embarks on a journey into the Western Woods, where they come across a crone who reveals the location of the Horseman's grave at the ominously named "Tree of the Dead." Upon digging up the grave, Ichabod finds the Horseman's skull missing, realizing that someone has taken it and thus controls the Horseman.
The rampage continues as the Horseman kills the village midwife and her family, as well as Katrina's suitor Brom when he attempts a rescue. Ichabod theorizes that the Horseman is systematically eliminating targets tied to a hidden conspiracy. Their investigation leads them to Hardenbrook, who discloses that the first victim, Peter Van Garrett, had secretly married the widow, establishing a new will that left his wealth to her. Ichabod concludes that all victims, saving Brom, are either beneficiaries or witnesses to this new arrangement, implicating Baltus, as a relative of Van Garrett, as the likely mastermind behind the Horseman's actions.
When Katrina learns of the accusations against her father, she burns the evidence. In a twist of fate, Hardenbrook takes his own life, and Steenwyck holds a town meeting aimed at discrediting Ichabod. Just then, Baltus bursts in, announcing the Horseman has murdered his wife. Chaos unfolds as the Horseman attacks the church. Amid the pandemonium, the townsfolk turn against one another leading to the deaths of Steenwyck and Lancaster, while the Horseman seizes Baltus, dragging him out through a window, finally claiming his head.
Ichabod initially suspects that Katrina has been controlling the Horseman. However, he soon discovers that her supposed summoning diagram is actually a protective symbol. His investigation leads him to uncover a post-mortem wound on Lady Van Tassel's body. The true Lady Van Tassel reveals her identity to Katrina, disclosing her origins from a once-prominent family that Van Garrett cast aside. Fuelled by vengeance against those who wronged her, she resorted to a dark pact with Satan, resurrecting the Horseman to reclaim what was once hers.
As the plot unfolds, Ichabod and Masbath race to a windmill to confront the Horseman. In a frantic escape that results in the destruction of the windmill, they flee to the Tree of the Dead. Ichabod tosses the skull to the Horseman, restoring his identity. With his head back, the Horseman spares Katrina and turns his wrath on Lady Van Tassel, delivering a bloodied kiss, before dragging her to Hell as per their agreement. With his faith renewed, Ichabod returns to New York alongside Katrina and Young Masbath, just in time to welcome the dawn of a new century.
