This conceptual paper examines the psychological and cultural dimensions of value transformation and proposes a culturally responsive counselling framework called Folktale Therapy for Value Reorientation. Drawing on Humanistic Theory, Social Learning Theory, Narrative Identity Theory, and African Indigenous Psychology grounded in Ubuntu philosophy, the paper illustrates how culturally embedded storytelling may facilitate moral internalization, identity coherence, and prosocial development. Empirical literature on narrative interventions, moral development, and culturally adapted psychotherapy is reviewed to support the model’s plausibility. A structured empirical validation framework is outlined to guide future research. Integrating indigenous narrative traditions within counselling practice offers a theoretically coherent, contextually appropriate, and ethically grounded approach to supporting youth identity formation in multicultural and postcolonial contexts.