The purpose of this essay is to examine the impact of Taoism on the five Ping-hua stories of the Yuan dynasty and the interactions between them. Taoism was extremely popular in the Yuan dynasty and the five Ping-hua stories of the Yuan dynasty have occupied an important place in the history of Chinese vernacular literature. The writing format and style of these Pinghua stories paved a way for the later development of the Yen-I stories of the Ming and Ching dynasties. By means of adding Taoist terms, magics, and myths, the Ping-hua stories which were based on historical narratives the Taoist terms, magics, myths in these five stories, this essay not only demonstrates how Taoism was used by the Ping-hua writers but also proves that these Ping-hua stories had their origin in south China. The five Ping-hua stories were another good example in showing the close relationship between religion and Chinese vernacular literature.