Educators read narrative fiction with children not only to promote their literacy skills, but also to support their sociomoral development. However, different approaches strongly diverge in their explanations and recommended instructional activities. Informed by theoretical understandings of reader-text transactions, this integrative review presents three different conceptions about how children learn socially from narrative fiction. The first approach explains sociomoral learning through narrative fiction by children’s extraction and internalization of the text’s moral message. The second approach refers to children’s training of mindreading and empathy as they become immersed in a fictional social world and imaginatively engage with the fictional characters’ perspectives. The third approach focuses on children’s social reasoning development through engagement in argumentative dialogues with peers about the complex sociomoral issues raised in narrative fiction. The article aims to theoretically position a wide range of literary programs to clarify their psychological foundations as well as critically discuss their strengths and limitations.