Narratology is both the theory and the study of narrative and narrative structure and the ways that these affect our perception. Modern narratology is thought to have begun with Vladimir Propp and the Russian formalists.

Vladimir Propp, in his book Morphology of the Folk Tale (1928), analyzed the basic plot components of Russian folktales and identified the simplest irreducible narrative elements in them.
He identified a sequence of 31 functions and 7 broad character types which can be applied to all of the stories he analyzed. This kind of structural analysis has uncovered that these recurring narrative elements are based on the basic socio-psychological tasks that people confront during their lives, such as issues of dependence and independence, selfishness and sacrifice, birth and death.

Russian Formalism is distinctive for its emphasis on the functional role of literary devices and its original conception of literary history. Russian Formalism also has strong associations with the structuralist quest for a formal system of useful descriptions applicable to any narrative content. The structuralists seek to understand how recurrent elements, themes and patterns yield a set of universals that determine the make up of a story.