Since long ago, children have been the addressees of myths and fairy tales. Through providing indirect responses to the needs and questions of children and enriching their faculty of imagination, myths are considered to be an important educational model in the processes of teaching/learning and therapy. This study, while referring to some of the functions and effects of Iranian myths, aimed to explore their therapeutic effects on children. In line with this purpose, the researcher chose 40 Iranian myths which enjoy several educational, instructional, and therapeutic functions. Next, following a descriptive-analytic method, the psychological and psychotherapeutic aspects of such myths were investigated in terms of such elements as anxiety treatment, thoughtgeneration and problem-solving ability, aggression, self-confidence, development of emotions and feelings, imagination, decision-making, fear control, compatibility with environment, family relationships, and ethics. The findings indicate that myths are appropriate tools for treating children’s mental and psychological problems and disorders. Although they sometimes perform some negative functions, they generally hold a specific place in the process of psychotherapy regarding children’s character formation, thought development, obtaining new experiences in the face of difficulties, anxiety release, and psychological balance.