This paper presents the methodological framework of the Tales in Motion (TiM) project, an interdisciplinary initiative aimed at preserving and promoting intangible cultural heritage through extended reality (XR). Implemented within the UNITA Alliance and involving partners from Portugal, Romania, and Spain, the project engages local communities in co-creating animated narratives based on regional folklore, myths, and legends. These narratives are developed into immersive augmented-reality experiences, fostering deeper cultural engagement and supporting sustainable cultural tourism. The methodology integrates several phases such as cultural mapping, participatory workshops, collaborative scriptwriting, and iterative prototyping. TiM emphasizes student involvement, cross-sector collaboration, and digital accessibility. The project bridges the gap between heritage and innovation by combining traditional storytelling with state-of-the-art visual technology. This paper outlines the key methodological phases, highlights the challenges encountered and solutions applied, and reflects on the project’s replicability in other cultural contexts. The TiM project benefits local communities, students, educators, cultural institutions, and researchers by preserving cultural heritage through XR, empowering co-creation, and fostering innovation in storytelling, tourism, and digital humanities.