The king of Útgarðr wins by making his opponents fight abstractions, and then tells them so.
Snorri's account in Gylfaginning is the longest sustained piece of narrative prose in the Prose Edda and the best-constructed story in Norse literature. It also has a structural peculiarity: the antagonist explains his own trick at the end, in detail, with something close to admiration, and then disappears along with his castle.
The road there
Thor, Loki and the servants Þjálfi and Röskva travel east and spend a night in what they take to be an enormous hall with a side-chamber. In the morning it turns out to be the glove of a giant called Skrýmir, sleeping nearby, whose snoring they had mistaken for an earthquake.
Skrýmir walks with them, carries the provisions in his bag, and goes to sleep under an oak. Thor cannot open the bag. He hits the sleeping giant on the head with the hammer three times over the course of the night; Skrýmir wakes each time and asks whether a leaf fell on him, or an acorn, or a twig. At the parting he advises them not to boast at Útgarðr, where the men are bigger than he is.
The contests
At the stronghold, Útgarða-Loki receives them with open contempt and says nobody may stay who cannot perform some feat better than anyone else.
- Loki claims he can eat faster than anyone. He is matched against Logi and they meet in the middle of a trough of meat — but Logi has consumed the bones and the trough as well.
- Þjálfi, a famous runner, races Hugi three times and loses by a widening margin.
- Thor is offered a drinking horn that ordinary men empty in one draught, and good drinkers in two. He drinks three times, enormously, and the level barely moves.
- Told to lift the household cat, he gets one paw off the floor.
- Offered a wrestling match with the old nurse Elli, he is forced to one knee.
They are given hospitality anyway and escorted out in the morning. And at the boundary Útgarða-Loki explains.
He was Skrýmir. He had tied the provision bag with iron wire. He put a flat-topped mountain between his head and the hammer — and if they look, there are three square valleys in it, one very deep.
Logi was wildfire. Hugi was thought, and nothing outruns it. The horn's far end was in the sea, and the drinking had lowered the ocean, which men now call the tide. The cat was Jörmungandr, and they were all terrified when Thor got a foot of it clear of the ground. Elli was old age, and no one has ever stood against her, or ever will.
Then he says he would prefer they never came back, and that he will defend his castle with the same arts. Thor raises the hammer and there is no castle and no king — only a wide fair plain.
What kind of victory this is
The story is usually described as Thor being humiliated, and Snorri's own framing invites it. But Útgarða-Loki's confession says the opposite: the giants were frightened, they cheated because they had to, and the illusions were an emergency measure. Thor lost three contests he could not have won and came within a paw of dragging the world-serpent out of the sea and within a swallow of drinking the ocean dry.
The comedy only works because the audience knows exactly how strong he is. And the deeper move is theological: the three unbeatable opponents are fire, thought and old age — the things nothing physical defeats. The strongest god in the north is set against the categories that strength does not apply to, and he nearly manages.
Saxo's completely different Utgarthilocus
Gesta Danorum Book Eight contains a figure called Utgarthilocus and he is nothing like Snorri's illusionist. He is a giant bound in a cave in a foul, dark region beyond the known world; the Danish hero Thorkillus travels there with a party, enters the cavern past squalor and stench, and pulls a hair from the bound giant's beard as proof — releasing a smell so appalling that several of his men die of it.
Saxo has therefore attached the name to a bound monster, which is to say he has merged the trickster king with Loki in his punishment — or preserved a tradition in which the two were always one figure. The name itself means "Loki of the Outyards," and whether it originally designated the trickster in his outland aspect or an unrelated giant who acquired the name is unresolved.
The two texts are near-contemporaries. They share a name and nothing else, which is a pattern the Icelandic and Danish traditions repeat with Baldr and Höðr too.
Why this episode survives retelling
The episode has been retold constantly — it is the Norse myth that most reliably survives translation into children's literature, because the reveals are so clean. It has no cult dimension and Útgarða-Loki has no place-names or worship, being a narrative device rather than a god.
For the fuller narrative, see Thor in Útgarða-Loki's hall; for the giants as a class, the older powers; and for the tradition, the Norse overview.
Does Útgarða-Loki appear anywhere else in the Eddas?
No. He is confined to this one narrative in Gylfaginning, and the Eddic poems never mention him. Hárbarðsljóð and Lokasenna both refer to Thor's humiliation with a glove and a food-bag, which shows the episode was current before Snorri, but they do not name the king. This is one of the cases where Snorri is our only detailed source for a story that other texts confirm existed, and where his telling is so much better than anything around it that it is hard to know how much is transmission and how much is authorship.
What is Útgarðr, exactly?
The name means "the outyards" — the land outside the fenced enclosure, as opposed to innangarðs, the space within. Norse spatial thinking is built on that opposition: Miðgarðr and Ásgarðr are enclosed and defended, and everything else is outside. Útgarðr is therefore not so much a place with coordinates as the category of "out there," and it is entirely appropriate that its stronghold turns out not to be at any particular location and that the whole thing vanishes when looked at directly.