verb

• (intransitive) To tell invented stories, often those that involve fantasy, such as fables.
  "Human fears, needs, dreams release the latent propensities of the subliminal soul, and to respond to them the fabulating imagination sets to work."
• (transitive, archaic) To relate as or in the manner of a fable.
  "Anyone who considers it a pleasure to compose short stories or to fabulate a tale, must remain silent and say nothing of her beauty."
• (intransitive, obsolete) To tell fables, to narrate with fables.
  "The Fort is ſo barricadoed, that it is hard ſcaling it : the refractary Rebell ſo guarded with Euill and Poyſon, ſo warded with unruly and deadly ; as if it were with Gyants in an Inchanted Towre, as they fabulate ; so no man can tame it."

noun

• (specifically) A folk story that is told for entertainment, and not intended to be taken as true.
  "To jocular fabulates (Sherzfabulate) I place inter alia some of the “Tales of the Stupid Ogre” in Aarne’s Type Register."