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In this paper, we present "1001 Nights", an AI-native game that allowsplayers lead in-game reality through co-created storytelling with the characterdriven by large language model. The concept is inspired by Wittgenstein's ideaof the limits of one's world being determined by the bounds of their language.Using advanced AI tools like GPT-4 and Stable Diffusion, the second iterationof the game enables the protagonist, Shahrzad, to realize words and stories inher world. The player can steer the conversation with the AI King towardsspecific keywords, which then become battle equipment in the game. This blendof interactive narrative and text-to-image transformation challenges theconventional border between the game world and reality through a dualperspective. We focus on Shahrzad, who seeks to alter her fate compared to theoriginal folklore, and the player, who collaborates with AI to craft narrativesand shape the game world. We explore the technical and design elements ofimplementing such a game with an objective to enhance the narrative game genrewith AI-generated content and to delve into AI-native gameplay possibilities.

Language as Reality: A Co-Creative Storytelling Game Experience in 1001 Nights using Generative AI