In this paper, we review the concept of collective narratives and their role in shaping group behaviour. We see collective narratives as ‘meta‐stories’ embraced by groups that incorporate values and beliefs about social reality, therefore providing a blueprint for group norms which, in turn, inform group members' behaviour. Our aim is to both describe the psychological processes underpinning the relation between collective narratives and group behaviours and develop an integrative typology of the functions of collective narratives (as they connect to various collective behaviours). We start by discussing definitions in the recent literature and propose an integrative conceptualisation which positions collective narratives in the context of collective action research. Next, we focus on the process by which collective narratives provide the bases for identity formation, development, and change, thus shaping group behaviour. We see collective narratives as central in understanding group behaviour, as they function as ‘meta‐stories’ that incorporate moral codes and values, and beliefs about the ingroups and outgroups—providing a blueprint for group norms which, in turn, inform group members' behaviour. In the second part of the article, we describe a typology of collective narratives according to their functions, structured around two core dimensions: the context/s in which collective narratives develop and are shared (i.e., intragroup vs. intergroup) and their effects within these contexts (i.e., driving consensus vs. driving dissent). We identify four distinctive types of collective narrative functions and review research showing how each of them shapes specific social identity content, including behaviour prescribing norms. We then show how these specific norms shape behaviours ranging from cooperation and pro‐social action to hostile intergroup conflict. The implications of this contribution are twofold. First, by providing a systematic account and categorisation of how collective narratives function in society and of their connections to social identities (and their content), we can more accurately deduct group norms and predict behaviours in specific circumstances, including in relation to political violence. Second, by better understanding the narratives that provide the bases of identity formation, development, and change, we can improve attempts to create alternative narratives that unify rather than divide people, so that pathways to co‐operation might be chosen over conflict.