This essay connects two strands of psychological research with insights from narrative theory in order to explore the cognitive and ethical potential of fictional narratives. After a brief introduction to psychological research on the persuasive power of fictional stories to change readers’ beliefs and to improve readers’ abilities of understanding other human beings, this essay examines which kinds of stories and which features of fiction can have such an impact on readers’ minds. The essay focuses on the potential of fiction to enhance readers’ abilities of social cognition, since they form a crucial basis of ethically informed behavior. The last part of the essay highlights further fields of research opened up by this combination and interrelation of psychological research and the theory of narrative.