Peyton Farquhar is hanged at the end of the story.
The story uses a clever twist ending. The entire sequence of events after Farquhar is about to be hanged is a hallucination or a dream he experiences in the moments before his death. His escape from the bridge, his journey back home, and the reunion with his wife are all imagined. The final line of the story, "Peyton Farquhar was dead; his body, with a broken neck, swung gently from the timbers of the Owl Creek Bridge," confirms this.