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Ivanhoe is set in England during the reign of King Richard I, also known as the Lion-Hearted. The time is a little over a hundred years after the decisive battle of Hastings, at which Harold, the Saxon claimant to the English throne, was killed by William, Duke of Normandy. The outcome of this battle is that the Saxons, who had owned and cultivated their lands since the early years of the first century, are now subjected to the rule of the foreign French Normans. The French language has overshadowed the old Anglo- Saxon, while French rituals and courtly manners mock the simple and homely Saxon way of life.
The few Saxon nobles left alive are resentful when their lands are either threatened or seized by the Norman lords. The common people are terrified of the cruel and unjust methods used to subdue them. The gap between the two races has widened because neither William of Normandy nor his successors care to blend with the people, or to even learn their language or their ways.
When Richard I comes to the throne, he spends almost all of his reign fighting the Saracens (Moslems) in the Holy Land. He is a good and fair man, but as he is hardly in England, his greedy and corrupt brother, John, finds it easy to take over. John encourages the Norman lords to squeeze the Saxons of whatever wealth and lands they possess. The country is, in fact, in a chaotic state.
It is against this background that Sir Walter Scott sets his narrative. Wilfred of Ivanhoe has been disinherited by his father, Cedric the Saxon. Ivanhoe has earned his father's displeasure by showing tolerance and loyalty to the Norman King Richard. Ivanhoe has also fallen in love with Rowena, Cedric's ward and a direct descendant of Alfred the Great. Being politically ambitious, Cedric has intended that Rowena marry Athelstane, who also has royal Saxon blood. Such an alliance would produce a powerful Saxon claim to the English throne.
Cedric and Athelstane join in a grand banquet at Ashby Castle, hosted by Prince John. Here they are insulted by the Norman knights who mock their manners. After the banquet they travel through the forest towards York. On the way, they meet up with and join Rebecca's party, unaware that the invalid with her is Ivanhoe. A little later, they are attacked by De Bracy and his men, disguised as yeomen outlaws. De Bracy has fallen in love with Rowena and wishes to persuade her to marry him. The prisoners are taken to Torquilstone Castle, now the property of Front-de- Boeuf.
Wamba, Cedric's jester, is the only one who escapes. He decides to rescue his master by disguising himself as a priest come to give absolution to the Saxon prisoners who have been condemned to death. Rebecca, also imprisoned, is being courted by Brian de Bois-Guilbert. Cedric escapes and makes contact with Robin of Locksley (Robin Hood) and his outlaws. They are joined by King Richard, still disguised as the Black Knight. Together, they attack the castle and free the prisoners with the help of Urfried, an old hag who is also a victim of Front-de-Boeuf. As the battle rages, Urfried sets fire to the castle, and both she and Front-de-Boeuf perish in the flames. De Bois-Guilbert manages to escape, taking Rebecca with him. They reach Templestowe, where Rebecca is accused of witchcraft and condemned to be burned at the stake. Ivanhoe follows and champions her in a trial by combat against de Bois-Guilbert. The latter is killed, and Rebecca is set free.
The novel ends with Ivanhoe marrying Rowena. It is also revealed that the Black Knight is actually Richard, King of England. Cedric realizes that the Saxons may never reclaim the throne, but decides it is possible to tolerate and even admire some Norman rulers; he pledges his loyalty to Richard. Rebecca and her father leave England.