In two studies, indirect out-group contact via narrative fiction was shown to foster empathic growth and reduce prejudice. Participants read an excerpt from a fictional novel about a counterstereotypical Arab-Muslim woman. Individuals who were more transported into the story rated Arab-Muslims significantly lower in stereotypical negative traits (Study 1, N = 67) and exhibited significantly lower negative attitudes toward Arab-Muslims (Study 2, N = 102) post-reading than individuals who were less transported into the story. These effects persisted after controlling for baseline Arab-Muslim prejudice, reading-induced mood change, and demand characteristics. Affective empathy for Arab-Muslims and intrinsic motivation to reduce prejudice were also significantly increased by the story and each provided independent explanatory mechanisms for transportation’s association with prejudice reduction. Narrative fiction offers a safe and rich context in which exposure and understanding of an out-group can occur and can easily be incorporated in educational and applied settings.