It is composed of two story groups, or cycles: Volume 2 The second volume is a collection of four unconnected (standalone) stories that were previously published in magazines: The title is an allusion to the collection of tales known as the One Thousand and One Nights, which Stevenson had read and liked.

Although Stevenson's stories were set in modern Europe, he was stylistically drawing a connection to the nested structure of the Arabian tales.

As in A Thousand and One Nights, where we have a caliph named Harun the Orthodox, who wanders through the streets of Baghdad in disguise, here in The New Arabian Nights by Stevenson, we have Prince Florizel of Bohemia, who wanders through the streets of London in disguise.Two eagerly awaited translations of the Arabian Nights, by Richard F. Burton and John Payne, were in the works in the late 1870s and early 1880s, further helping to draw popular attention to Stevenson's "New" title.

In 1890 Arthur Conan Doyle characterized "The Pavilion on the Links" as "the high-water mark of Stevenson's genius" and "the first short-story in the world".

[2] Barry Menikoff (1987) considers New Arabian Nights to be the starting point in the history of the English-language short story.