The Collaborative International Dictionary of English v.0.48:

fairy tale \fairy tale\ n.
   1. a story about magical or mythological creatures, such as
      fairies, elves, goblins, trolls, orcs, unicorns, wizards,
      dragons, etc., usually composed for the amusement of
      children; called also a fairy story.
      [PJC]

   2. a false story intended to deceive or mislead, especially
      one involving unlikely events or situations; called also a
      fairy story.
      [PJC]

WordNet (r) 3.0 (2006):

fairy tale
    n 1: a story about fairies; told to amuse children [syn:
         fairytale, fairy tale, fairy story]
    2: an interesting but highly implausible story; often told as an
       excuse [syn: fairytale, fairy tale, fairy story, cock-
       and-bull story, song and dance]

Moby Thesaurus II by Grady Ward, 1.0:

64 Moby Thesaurus words for "fairy tale":
   Marchen, Western, Western story, Westerner, adventure story,
   allegory, apologue, bedtime story, blague, cock-and-bull story,
   detective story, exaggeration, fable, fabliau, falsehood, falsity,
   fantasy, farfetched story, farrago, fib, fiction, fish story, flam,
   flimflam, folk story, folktale, gest, ghost story, half-truth,
   horse opera, legal fiction, legend, lie, little white lie,
   love story, mendacity, mystery, mystery story, myth, mythology,
   mythos, nursery tale, parable, pious fiction, prevarication,
   romance, science fiction, shocker, slight stretching,
   space fiction, space opera, story, suspense story, tale,
   tall story, tall tale, taradiddle, thriller, trumped-up story,
   untruth, white lie, whodunit, work of fiction, yarn