This chapter discusses the use of stories, anecdotes, and humor in Positive Psychotherapy (PPT after Peseschkian). Stories (such as myths, tales, parables, legends, and anecdotes) are a unique traditional phenomenon of human culture, as they are one of the oldest records of tradition we have. Throughout history, they have been used as means to convey ideas, life experiences, and to alter emotions, such as making the listener feel encouraged or hopeful. Nowadays, such forms of meaning processing can also include cinematic stories, such as movies and series. All these phenomena contribute to a metaphorical understanding of the world and can be used in psychotherapeutic practice. The chapter presents both classical and contemporary theoretical research, expanding N. Peseschkian’s theoretical model of the function of stories through active and passive dimensions. New research in the field of neuroscience has made it possible to identify additional functions of stories used in psychotherapeutic practice. Additional functions of stories—jokes—are also emphasized. The experience of modern positive psychotherapists with stories and humor is summarized. Practical implications and ways of implementing stories and humor into therapeutic practice are shown and presented with case studies. The characteristics of good stories are described.