The interplay between classical Chinese prose and fiction during the Tang dynasty has long been a point of interest in Chinese literary history. This paper will first review literature on this topic by earlier scholars. Then it will go on to look at works by Han Yu (韓愈) and Liu Zongyuan (柳宗元)—two authors who have historically moved between classical Chinese prose and fiction—from three different perspectives in order to reveal the interplay with fiction seen in their prose. The relationship between the works of Han and Liu and Tang dynasty fiction is first to be seen in their common source in a historical/biographical tradition, with the specific nature of their interaction in this respect manifesting in the form of their fantastic, satirical style. Next, looking at the authorial intent of both Han and Liu, we can see that their use, in this particular vein of writing, of characters existing at the margins of society and anthropomorphized objects was in fact an intentional ploy to express their disappointment with and views on the world. This approach is both consistent with the traditional view of fiction as “having some value despite being of the small Way (小道)” and can be seen as a conceptual elevation of this kind of fantastic, satirical writing to the same level as the classics, history, and poetry. This in turn served to influence the self-awareness in later fictional creations and foment a bi-directional interaction on the notions of fictional creation. From this discussion, we will be able to see clearly that both Han and Liu employed the intent, contents and form of fictional narrative when writing their classical prose. In doing so, they expanded the range of artistic expression for classical prose as a literary form even as their writing served to nurture the production of fiction.