From The Collaborative International Dictionary of English v.0.48:
Fable \Fa"ble\ (f[=a]"b'l), n. [F., fr. L. fabula, fr. fari to speak, say. See Ban, and cf. Fabulous, Fame.] 1. A Feigned story or tale, intended to instruct or amuse; a fictitious narration intended to enforce some useful truth or precept; an apologue. See the Note under Apologue. [1913 Webster]
Jotham's fable of the trees is the oldest extant. --Addison. [1913 Webster]
Note: A fable may have talking animals anthropomorphically cast as humans representing different character types, sometimes illustrating some moral principle; as, Aesop's Fables. [PJC]
2. The plot, story, or connected series of events, forming the subject of an epic or dramatic poem. [1913 Webster]
The moral is the first business of the poet; this being formed, he contrives such a design or fable as may be most suitable to the moral. --Dryden. [1913 Webster]
3. Any story told to excite wonder; common talk; the theme of talk. "Old wives' fables. " --1 Tim. iv. 7. [1913 Webster]
We grew The fable of the city where we dwelt. --Tennyson. [1913 Webster]
4. Fiction; untruth; falsehood. [1913 Webster]
It would look like a fable to report that this gentleman gives away a great fortune by secret methods. --Addison. [1913 Webster]
From The Collaborative International Dictionary of English v.0.48:
Fable \Fa"ble\, v. i. [imp. & p. p. Fabled; p. pr. & vb. n. Fabling.] To compose fables; hence, to write or speak fiction; to write or utter what is not true. "He Fables not." --Shak. [1913 Webster]
Vain now the tales which fabling poets tell. --Prior. [1913 Webster]
He fables, yet speaks truth. --M. Arnold. [1913 Webster]
From The Collaborative International Dictionary of English v.0.48:
Fable \Fa"ble\, v. t. To feign; to invent; to devise, and speak of, as true or real; to tell of falsely. [1913 Webster]
The hell thou fablest. --Milton. [1913 Webster]