"connected account or narration of some happening," c. 1200, originally "narrative of important events or celebrated persons of the past," from Old French estorie, estoire "story, chronicle, history," from Late Latin storia, shortened from Latin historia "history, account, tale, story" (see history).
A story is by derivation a short history, and by development a narrative designed to interest and please. [Century Dictionary]
Meaning "recital of true events" first recorded late 14c.; sense of "narrative of fictitious events meant to entertain" is from c. 1500. Not differentiated from history until 1500s. For the sense evolution compare Gaelic seanachas "history, antiquity," also "story, tale, narration," from sean "old, ancient" + cuis "a matter, affair, circumstance."
As a euphemism for "a lie" it dates from 1690s. Meaning "newspaper article" is from 1892. Story-line first attested 1941. That's another story "that requires different treatment" is attested from 1818. Story of my life "sad truth" first recorded 1938, from typical title of an autobiography.
Do not tell fish stories where the people know you; but particularly, don't tell them where they know the fish. ["Mark Twain," in "More Maxims of Mark" by Merle Johnson (1927)]