AI.R Taletorium is a character-driven, interactive, multi-modal AI platform designed to bring children and parents together in a collaborative storytelling journey with artificial intelligence. This system fosters a co-creative user experience, blending human and AI creativity in a unique narrative process. This paper focuses on the interaction between humans and AI through avatars and a co-creative interface within the fairy tale storylines created by the platform. The interface acts as a bridge, connecting users to their sense of authorship and digital presence, thereby facilitating a collaborative experience that integrates the creative inputs of both humans and AI. We argue that this interface is the system’s core, enabling children and parents to embark on a distinctive storytelling journey with AI. One of the key challenges encountered during the development of the AI.R Taletorium system is the user interface design that fosters seamless collaboration between children and AI and enhances users’ perception of control, ownership, and creative contribution within a shared digital environment. By offering a seamless and engaging collaborative experience, the system aims to empower children to express their creativity and imagination in an AI-created storytelling environment, providing an exciting and enjoyable journey for both children and parents.