To engage in the composition of fables or stories, especially those featuring a strong element of fantasy.
To write or tell fictitious stories, esp. highly allegorical or fantastic ones.
A folk story that is not entirely believable.
(specifically) A folk story that is told for entertainment, and not intended to be taken as true.
Origin of fabulate
From Latin fÄbulÄtus, perfect passive participle of fÄbulor (“tell stories, chat"), from fÄbula (“fable").