The mood of "The Melancholy Hussar of the German Legion” is primarily depressing and bleak. While there are a few moments of hope in the story—such as when Phyllis and Matthäus make plans to run away together to Germany—the story is, overall, a series of unhappy events. It opens with Phyllis feeling lonely and trapped in her father’s isolated house in the English countryside, moves to her feeling guilty and torn over falling in love with a man she should not (as she is engaged to someone else and her father would never approve), and ends with her regretting her decision not to run away with Matthäus while she watches him die from afar.
The narrator’s final words capture the bleak mood at the end of the story:
Their graves were dug at the back of the little church, near the wall. There is no memorial to mark the spot, but Phyllis pointed it out to me. While she lived she used to keep their mounds neat; but now they are overgrown with nettles, and sunk nearly flat. The older villagers, however, who know of the episode from their parents, still recollect the place where the soldiers lie. Phyllis lies near.
Here, the narrator describes the woeful way in which Phyllis tended to Matthäus and his friend Christoph’s graves after they were executed, only for the grave mounds to become “overgrown” and “sunken flat.” The simple final sentence “Phyllis lies near” is sparse and emotionless, likely the narrator’s way of communicating that Phyllis's death (like her life) was unceremonious. This final passage suggests that Phyllis and Matthäus’s tragic love story is all but forgotten and that, when the narrator (and the “older villagers”) pass away, their story will be lost as well.