Like Siddhartha Gautama, the founder of Buddhism, the prince in this story was sheltered from all knowledge of suffering. The prince explains to the swallow that was he happy during his lifetime because he lived in a palace surrounded by a high wall that blocked out anything unpleasant. He played with companions in his garden and led dances at night. He never explored what was outside the palace walls. Therefore, because he was untroubled, he was called the Happy Prince. He says he was happy because at that time he equated pleasure with happiness.

Following his death, however, the Prince (like the Buddha after he grew up) can see the suffering and poverty all around him. This has made him very sad, especially because, as a statue, he is immobilized. Nevertheless, when he meets the swallow, who can fly around, he now has a way to help other people. He becomes happy in a new way, through insisting that the costly gold and jewels of his statue be given to help the poor. The swallow distributes the wealth to those most in need. This is a deeper and more profound form of happiness than what the prince experienced in life, and he is rewarded at the end with a place for his heart in heaven.