This work analyses traditional Chinese narrative and the major conventions and strategies of reading and interpreting narrative works, both historical and fictional, from the earliest narratives through the Ch'ing dynasty. Traditionally, fictional narratives were read and judged as if they were historical works. Only with the widespread popularity of novels in the Ming and Ch'ing dynasties were Chinese theorists able to come to terms with fiction and to dehistoricize the 'poetics of fiction.' The author traces the evolution of this process as part of a broader attempt to develop a comparative poetics of narrative.