In once sense all literature is fantasy because all literature comes from the imagination rather than actual fact. However literary fantasy (also referred to as genre fantasy) is a subcategory of a broad range of fiction that can be best described as literature of the fantastic. Other literatures of the fantastic include science fiction and horror.

Miriam Allen de Ford has noted: "Science fiction deals with improbable possibilities, fantasy with plausible impossibilities."

Fantasy has many progenitors in literature, namely:

• Mythical adventures such as The Odyssey
• Fairy tales
• Voyages of discovery
• Stories of ideal societies such as Thomas More's Utopia

But literary fantasy as we perceive of it today deliberately creates an internally consistent fictitious world apart from our reality. However, unlike the world of science fiction, a fantasy world need only concern itself with its own internal logic.

We can divide the development of fantasy as literature into the following overlapping stages:

• Traditional Fantasy: works based on myths and legends
  
• Roots of Modern Fantasy: original works containing created worlds not based on existing myth or legend
• Early Modern Fantasy: works written between the late 19th century and the 1950s
• Tolkien and Beyond: fantasy written since J. R. R. Tolkien's The Lord of the Rings trilogy transformed the genre