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.
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            Jotham's fable of the trees is the oldest extant.
                                                  --Addison.
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   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.
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            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.
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   3. Any story told to excite wonder; common talk; the theme of
      talk. "Old wives' fables. " --1 Tim. iv. 7.
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            We grew
            The fable of the city where we dwelt. --Tennyson.
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   4. Fiction; untruth; falsehood.
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            It would look like a fable to report that this
            gentleman gives away a great fortune by secret
            methods.                              --Addison.
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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.
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         Vain now the tales which fabling poets tell. --Prior.
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         He fables, yet speaks truth.             --M. Arnold.
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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.
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         The hell thou fablest.                   --Milton.
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WordNet (r) 3.0 (2006):

fable
    n 1: a deliberately false or improbable account [syn:
         fabrication, fiction, fable]
    2: a short moral story (often with animal characters) [syn:
       fable, parable, allegory, apologue]
    3: a story about mythical or supernatural beings or events [syn:
       legend, fable]