This paper aims at discussing how effectively and artistically Hawthorne expresses his theory of a Romance whose wold is a neutral territory of the Actual and Imaginary in his masterpiece, The Scarlet Letter. Hawthorne develops his view of mixture of the Actual and Imaginary in his fiction when he deliberately designs its setting and characters, and uses three main metaphors. In The Scarlet Letter the setting is bounded by both the actual and the imaginary. Hawthorne uses the history of the Puritan society, which gives its fiction a sense of reality. In the Puritan setting, the imaginary is basically built on the superstitious belief or fantasies of the Puritans. Puritans "real" world is mixed with their "really" imaginary belief. The characters like the setting, are bounded by the actual and the imaginary. Each of main characters is a human being in one sense but at the same time he or she is an allegorical type. Among characters, both Hester and Dimmesdale are more real than allegorical, on the other hand, both Chillingworth and Pearl are more allegorical than real. To convey the intermingling of the actual and the imaginary, Hawthorne employs the three metaphors of moonlight, the mirror, and the half-dream very effectively. The metaphor of moonlight, "making every object so minutely visible, yet so unlike a morning or noontide visibility," is "a medium the most suitable for a romance-writer to get acquainted with his illusive guest" as described in "The Custom House." The mirror reflects the physical reality and creates the semblance of the world. The third metaphor, half-dream, is effectively expressed in Hester`s fantasy and in Dimmesdale`s fantasy. The blending of the actual and the imaginary elicits the ambiguous responses to the work. Ambiguity is conveyed more effectively by the narrative strategy. The narrator plays an ambivalent role. Though the narrator is not a character who takes part in the events directly, he is an important figure throughout the work. Sometimes the narrator is deeply involved in the events of the work that he seems to ask us to feel sympathy for the characters; at other times, he maintains distance from them. Sometimes the narrator makes a direct address to the readers, but at the same time, he does not comment at all on even the crucial moments of the work. Instead he continues to say, "the reader may choose among these theories." After all, the technique of ambiguity presents us an opportunity for choosing one among more than two, though our choice is not easy. The whole vision is open to us. We can respond to the work with variety. It may be fruitful to understand our own ambiguous feelings about this work by placing them in the context of a Romance of a neutral territory of the actual and the imaginary and the ambivalent narrative voice.