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As a result of theoretical study, the article reveals the essence of fairy-tale therapy as a psychological method of influencing individuals, as an instrument of psychotherapy and correction. The main advantage of the fairy-tale therapy is that is based on fairy tales, and metaphors lay in their core. Currently, all known psychological practices use the fairy-tale method: Gestalt therapy, art therapy, psychodrama, transactional analysis, hypnotherapy, etc. A fairy tale develops an individual’s self-awareness, reveals his/her potential in relations with the outside and inner world, forms his/her ability to become a creator of own inner world as well as the outside world, that is, it defines an individual’s subjectivity, which is the purpose of the fairy-tale therapy. Fairy-tales are one of the forms through which an individual’s socialization takes place at different age periods. The article presents classification of fairy tales: entertaining, artistic, didactic, and psychological. Psychological fairy tales are divided into psychological-corrective, psychotherapeutic, meditative and developmental. The article also analyzes the features of used fairy tales, ways of their using in the practical work of psychologists, the mechanisms of their influence on children, their functions as well as the principles of work with fairy tales: mindfulness, links with the reality. We should emphasize that fairy tales fully satisfy the natural needs of primary school children: the needs for autonomy, competence, and activity. The article examines the following features of the fairy-tale therapy: informational content, sustainability, absence of boundaries, enchantment, emotionality, wisdom, absence of age restrictions. Also, the peculiarities of fairy tale using at a psychologist’s work with clients are described in detail: fairy tales used as metaphors, drawings themed on fairy tales, discussion of characters’ behaviour and motives, performance of episodes from fairy tales (which help perceive some emotionally significant situations), creative works themed on fairy tales. The mechanisms of fairy tale influence on individuals are described: fairy tales describe an individual’s deep experience of emotional crises; fairy tales influence on an unconscious level and actuate adaptation mechanisms that help to overcome stress; fairy tales teach children to successfully overcome fears, which allows them to maintain their psychic integrity.