“Interactive fiction” has been used to describe many of today’s multimedia products. In reality, there is not a universal understanding of what interactive fiction is or what it should entail. The meaning of “interactive” is often interpreted in different ways. Many stories are considered to be interactive because they are placed on the computer. Meanwhile, such stories may lack most of the essential qualities for good literature. Interaction fiction should be upheld to the same standards as traditional texts. Following this belief, this research covers the underlying theories of interactive fiction, examples of misleading “interactive fiction” studies, and guidelines for design pulled from the fields of writing, children’s literature and instructional technology. I have used these guidelines to develop a prototype of interactive fiction, which was be tested and revised in several cycles. First, I revised the prototype based upon reviews by several groups of experts from the areas of instructional technology and childhood education. The prototype was then pilot-tested by two participants from the target market. Based upon the pilot-test results, I revised the prototype. Finally, several participants read the prototype. In this final stage, I observed the participants and conducted interviews with open-ended questions. Using the prototype that was developed according to proposed standards, I was able to gain insight into the target market’s perception of interaction fiction. All details of the design and development of the prototype are included in effort to provide guidelines for building future interactive fiction. Additionally, several themes emerged when participants from the target market were observed and interviewed. Among the most prominent were the themes of storybook characters and identifying with those characters. Children in this study were able to identity themselves as the protagonist, making the main character’s decisions throughout the story. Further, participants added their own elaborations of the story. In the end, the evidence of this research showed that participants were able to go beyond reading the story. The submersion into to story can be rooted in several existing literacy theories, which are discussed. Lastly, this research provides suggestions for future research, development and implementation of interactive fiction.