This paper focuses on the multi-levels of narration in The Story of the Stone. It discusses the different functions of these levels, the possibilities they provide to our interpretation of the novel’s meaning, and the interaction and inter-connection of these levels to form a complete and consistent structure. The paper argues that the multiple narrative points of view lead to a juxtaposition of multiple levels of narration in the novel. The levels serve different functions and interweave with one another, rendering a complex narrative structure overall. The two Buddhist and Daoist monks, going back and forth across levels, not only manipulate the fates of its main characters, they also highlight the inter-connections between the multiple worlds and the multiple meanings in the Story.