This paper presents the issue of the fairy tale as a literary genre and its role and interpretation in the preschool institution. The first part of the paper elaborates the fairy tale as a literary genre and describes how fairy tale characters influence on children and what fairy tales teach them. In kindergarten children come across fairy tales every day, and thanks to them, they learn about life, how to behave in certain situations and about things that they should not do. Even though some parents think that classic fairy tales have a bad impact on children and that children are too small to comprehend the evil surrounding them, children perceive fairy tales in a particular way. Moreover, the profound meaning of fairy tales is presented and the children's need for magic and beauty that they find in fairy tales. Children experience fairy tales intensely. They identify themselves with the characters, enjoy their successes and cheer for them as they go through troubles. Also, the first part discusses fairy tales in literary education and upbringing at the pre-school level and the teachers' education in interpreting fairy tales as well as the interpretation itself and the children's experience of them. Their “Snow White” is highlighted as the theme of the paper. In a comparative presentation of the Grimm Brothers’ “Snow White” and the Walt Disney film adaptation it is discussed about the similarities, differences and the imperfections of both versions. This paper presents a detailed interpretation, significance and meaning of the fairy tale "Snow White" from a psychoanalytic point of view. The aim was to define the phases of childhood that the fairy tale "Snow White" so clearly helps to discern as well as the carrying out through childhood, pre-adolescence, puberty and finally growing up. This fairy tale relying on the psychoanalytic interpretations of Carl Gustav Jung, Bruno Bettelheim and Marc Girard, and there are pointed out similarities and differences in their opinions. According to Bettelheim, the fairy tale "Snow White" mainly deals with Oedipus conflict of a mother and a daughter, while Girard's problem of maturity in fairy tales is most often attributed to female relationships and periods of rivalry in the period of psychosocial maturation and selection of partners. Bettelheim highlights what makes a good childhood and what is needed to grow out of it, he refers to the harmful consequences of narcissism and gives us an insight into the depth and complexity of the structure of this fairy tale, its characters and their personality. Girard points out that a fairy tale is in its form of simplicity actually profound and that in its psychoanalysis we must not forget that it is primarily a literary work. By elaborating this theme, it is determined that the fairy tale "Snow White" is a very high quality and educational content that helps children to create their personality. Fairy tales possess a rich variety of resources and profoundness, and with good interpretation, they help children understand their deepest feelings, fears and longings without having to face the harsh reality that is still unavailable to them.