Stories are really an interesting one to read, especially kids love to listen to stories. It grabs the reader‘s attention and gives them great pleasure or excitement or thrill or suspense while reading it. Readers go along with stories and may have the expectation and predict the flow of story based on the previous situations narrated by the authors. Predicting the flow of story requires reasoning capacity to analyze the same. Human beings can easily reason the story based on their cognitive process whereas reasoning the stories by the system is not as easy and it requires a lot of intelligence to perform the same. This paper concentrates on to provide an environment for analyzing the stories on the basis of characters, events and the situations. It aims for reasoning the stories sentence by sentence based on the real world description using ontology. Ontology helps to investigate the stories by extracting the characters and events from the given story and provides the semantic relation among them. Ontology is formal explicit shared conceptualization. Ontology provides the domain knowledge which can be utilized for reasoning the stories semantically. Reasoning the stories based on the characters acts as a lead for the construction of the new different variety of stories with change in the characters, their nature and the events.