This essay aims to clarify how literary and nonliterary narratives function in society and culture. To reach this broad goal, it first presents a general framework inspired by the French sociologist Pierre Bourdieu and the American New Historicist Stephen Greenblatt. The framework centers on the notions of circulation and negotiation. Stories circulate from one field to another, thereby transporting and transforming narrative templates that belong to these fields. Stories negotiate these templates and in so doing invite readers to activate and negotiate their own narrative habitus. The second part of the essay compares the proposed theory of narrative in culture to existing narrative theories about circulation and negotiation and to the traditional model of narrative as a form of communication, which it tries to overcome. Finally, the essay offers a detailed analysis of The Lump of Coal (2008) by Lemony Snicket. The analysis shows that stories can be interpreted as ways of circulating and negotiating narrative templates on three levels. First, the plot of the text itself can be read as a circulation of elements taken from various domains mentioned in the story (especially art, nutrition, economy, and religion). Second, there is circulation and negotiation between the text and the paratext (including the blurb and the illustrations on the dust jacket), and third, the text negotiates and circulates contextual elements, more specifically templates, such as generic patterns, ethnic stereotypes, and commonsense morality.