This paper aims to study the historical meaning and function of \"Folktale on SHINLIP\". The \"Folktale on SHINLIP\", which took historical event as its story and background, can be classified as a genre of historical narratives. Folks, who were mostly illiterate, didn\'t leave any written records to their own thoughts to the historical events. So we couldn\'t conceive what their thoughts about those events. Folks, however, had expressed their feelings and reflections on the special historical events in the form of narratives or folktales. We could read folks\' thoughts not only on reality but also on history smeared in folk tales. The tale of SHINLIP\'s defeat and death in Tangumdae also showed us folks\' attitude to the historical event. Firstly, folks thought that the impersonal ethics of the governing class caused SHINLIP\'s defeat and death. Folks were criticizing inhumanity of the governing class through this narratives. They thought humanity should be prior to the ethical reasoning. Secondly, folks degraded SHINLIP\'s defeat and death as a private failure, while history recorded it as a national one. Their interpretations to the historical event seemed to implicate their strong national consciousness.