The setting of the story is at the old man's house, specifically in the middle of the night. The narrator tells the reader that he isn't crazy, but just nervous and diseased, though he can tell the story calmly. This tells the reader that the narrator is unreliable. He then explains that he is plotting to murder the old man he takes care of because he has a "vulture" eye. This shows that the narrator is the antagonist and that suspense is building up.
The narrator tries to prove his sanity to the reader by explaining how cleverly and carefully he proceeded with his plan. He says that he was "never kinder" to the old man during the full week before he killed him. For those seven nights, he would carefully look in on the old man at midnight. He would open his lantern so that a single ray of light shone onto his eye to see if it was open.