This chapter focuses on three core mental capacities that emerge when a child engages with a meaningful story: identification, echoing, and insight. We propose that these capacities are not only central to the child’s ability to derive personal meaning from narratives but also serve as valuable indicators for clinicians seeking to understand the child’s internal world. Building on this perspective, we present a novel research tool designed to assess these three capacities. We further examine the relationships between these capacities and broader developmental aspects. Finally, we discuss the potential applications of this assessment tool in clinical contexts, offering new directions for therapeutic engagement with children through storytelling.