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In this paper, we present Sam, an embodied conversational storyteller who tells stories interactively with children. Sam was designed to appear as a peer to preschool children, but to tell stories in a developmentally advanced way in order to model narrative skills important for literacy. Literacy learning - learning how to read and write, begins long before children enter school. One of the key skills to reading and writing is the ability to represent thoughts symbolically and share them in language with an audience who does not share the same background. Children learn and practice such important language skills in the informal setting of everyday storytelling with their peers and adults available around them. In particular, storytelling in a context of peer collaboration provides a perfect place where children not only learn language skills important for literacy, but also learn to be critical listeners of others' stories. Preliminary evaluation showed that by interacting with Sam, 5-year-old children's stories more closely resembled Sam's linguistically advanced stories with more quoted speech and temporal and spatial expressions. In addition, the children listened to Sam's stories carefully, assisting her and giving suggestions on how to improve them. With Sam, children not only learned new linguistic behaviors that are important for literacy, but also to become critical listeners of other's stories.