How can the stories we tell be turned from abstractions in our own minds into concrete elements in a digital environment that we can interact with? To immerse everyday storytelling into digital interactions, we created a game that turns entities in a story into digital assets that have functional roles. Taking the classic folklore as inspiration, we created 1001 Nights, a co-creative, mixed-initiative storytelling game using an existing AI creative writing system. In this game, Shahrzad (driven by the player) tells stories through a dialogue interface, while the King (driven by the AI model) continues the player’s story in turn. Text from the story is used in the game mechanics, so that if the player enters keywords such as ‘sword’ and ‘shield’, they are turned into equipment that can be used in battles. Players who are more engaged with the game, measured by the length of their inputs, are rewarded with better achievements. The game aims to facilitate player engagement and creativity through natural language interactions in an empowering setting. This paper presents the game design, a breakdown of the development process and an analysis of user data, including instrumented gameplay data from 2055 players and comments from 422 players. The player feedback indicates that they enjoyed the creative interactions, the game mechanics and the narratives they constructed.