It is often argued that narratives improve social cognition, either by appealing to social-cognitive abilities as we engage with the story world and its characters, or by conveying social knowledge. Empirical studies have found support for both a correlational and a causal link between exposure to (literary, fictional) narratives and social cognition. However, a series of failed replications has cast doubt on the robustness of these claims. Here, we review the existing empirical literature and identify open questions and challenges. An important conclusion of the review is that previous research has given too little consideration to the diversity of narratives, readers, and social-cognitive processes involved in the social-cognitive potential of narratives. We therefore establish a research agenda, proposing that future research should focus on (1) the specific text characteristics that drive the social-cognitive potential of narratives, (2) the individual differences between readers with respect to their sensitivity to this potential, and (3) the various aspects of social cognition that are potentially affected by reading narratives. Our recommendations can guide the design of future studies that will help us understand how, for whom, and in what respect exposure to narratives can advantage social cognition.