Although stories for children often feature supernatural and fantastical events, children themselves often prefer realistic events when choosing what should happen in a story. In two experiments, we investigated whether 3- to 5-year-olds (total N = 240 from diverse backgrounds) might be more likely to include fantastical events in stories about familiar fantasy characters. In Experiment 1, children saw stories about fantasy or real-world characters (e.g., a mermaid or an ordinary woman) and judged whether they would achieve goals using fantastic or realistic methods. Children were more likely to choose fantastic methods for the fantasy characters, and this tendency was more common in older children. In Experiment 2, children were asked yes/no questions about whether characters could use fantastic, realistic, and unusual methods to achieve goals. Children more often affirmed fantastic methods for fantasy than real-world characters. These findings contrast with previous work suggesting children avoid including fantastic events in fiction and suggest that children use precedent and familiarity to decide what can happen in a story.