As generative AI finds applications across entertainment, education, and marketing, one of its most sensitive and impactful frontiers is emerging in the realm of mental health and emotional support. In this chapter, we explore how AI-driven storytelling tools especially those capable of responding to emotion in real time are being used to create therapeutic environments, build empathy, and offer companionship to users in need. Unlike branded storytelling, the goal here isn’t conversion or engagement, but connection, validation, and care.