The story is set in an unnamed penal colony. Internal clues and the setting on an island suggest Octave Mirbeau's The Torture Garden as an influence. In the Penal Colony describes the last use of an elaborate torture and execution device that carves the sentence of the condemned prisoner on his skin before letting him die, all in the course of twelve hours. As the plot unfolds, the reader learns more and more about the machine, including its origin and original justification.