This article examines character formation in children’s literature in terms of its aesthetic, performative, and didactic functions. The research combines psychological interpretation with linguistic and stylistic analysis and explores, from the point of view of literary studies, the significance of character portrayal in the formation of children’s ethical perception, emotional and cognitive development, imagination, and psychological level. The findings reveal that constructing characters in children’s literature performs developmental, allegorical, aesthetic, cognitive, and pedagogical functions. The article uses the novel “James and the Giant Peach” by Roald Dahl to investigate the characterization techniques employed in it and the importance of the novel’s symbolically layered narrative strategies in negotiating power, morality, and identity formation in young readers. Through analytical examples from this novel, the paper illustrates that effective character formation depends on paying attention to the age characteristics and the psychological and cognitive level of children. Furthermore, the study emphasizes that character portrayal in children’s narratives is a peculiar pedagogical process involving linguistic precision, symbolic meaning, and sensitivity to the cognitive and emotional capacities of children.