Storytelling is a critical step in the cognitive development of children. Particularly, this requires children to mentally project into the story context and to identify with the thoughts of the characters in their stories. We propose to support free imagination in creative storytelling through an enactment-based approach that allows children to embody an avatar and perform as the story character. We designed our story creation interface with two modes of avatar: the story-relevant avatar and the self-avatar, to investigate the effects of avatar design on the quality of children’s creative products. In our study with 20 child participants, the results indicate that self-avatars can create a stronger sense of identification and embodied presence, while story-relevant avatars can provide a scaffold for mental projection.