Young children struggle with the "reader's dilemma" (i.e., which aspects of a story with fantasy elements apply to real life), and research finds that incorporating fantasy elements such as anthropomorphic characters and unrealistic settings into storybooks can negatively affect children's learning. To explore whether children can learn about a cause-and-effect relation from fantasy storybooks, we presented children with a realistic storybook or one containing varying levels of fantasy (Study 1) and a storybook with multiple fantasy elements (Study 2). Children learned about a target event depicting a physical cause-and-effect relation (i.e., if you flick your wrist, the stone will skip across the water), and we assessed their comprehension of the target cause-and-effect relation and their ability to generalize this information to the real world and reason counterfactually about the outcome. Across two preregistered studies (3- to 5-year-olds, N = 214), 5-year-olds, and some 4-year-olds, learned and generalized their knowledge about the target cause-and-effect relation from both the realistic and fantastical storybooks, suggesting that fantasy does not hinder children's learning about physical cause-and-effect relations.