This essay focuses on revindicating narrative as a reliable mode of knowledge. Why do stories matter? Countering postmodern associations of narrative with modes of deceit and fabrication, this essay seeks to uncover an ancient tradition, dating to Aristotle and recovered in modern hermeneutic phenomenology, that discloses narrative as a key tool of human understanding. I make a case for restoring narrative to a setting more primordial than abstract concerns such as aesthetics or epistemology: the everyday context of skillful practical action. Practical action requires a particular kind of reasoning, which couples interpretation to action and pairs believability with ethically responsible decision-making. Aristotle was the first to argue this, baptizing it phronesis (practical judgment or wisdom) and suggesting its association with narrative. I argue that illuminating narrative’s role for judgment-based action is essential for grasping the reason why literature actually matters.