Background: Within contemporary medical education systems dominated by the biomedical paradigm, medical students commonly experience a decline in empathy alongside uncertainty in professional identity formation. Narrative medicine, as an educational approach designed to bridge objective technical reasoning and subjective human experience, has been proposed as a response to this humanistic crisis. However, the psychological mechanisms underlying its effects, the boundaries of existing empirical evidence, and strategies for systematic implementation remain insufficiently clarified. Content: Drawing on a comprehensive review of the literature, this article elucidates two core theoretical mechanisms through which narrative medicine operates. First, through the cycle of attention, representation, and affiliation combined with reflective practice, narrative medicine facilitates the coordinated development of cognitive empathy and emotional resonance. Second, through narrative integration, it supports learners in transforming fragmented clinical experiences into coherent professional identities. A synthesis of empirical studies published over the past decade indicates that well designed narrative medicine curricula can enhance reflective capacity, communication skills, and a sense of professional meaning, although their effectiveness is substantially moderated by curricular intensity, pedagogical modality including digital and multimodal approaches, and cultural context. Conclusion: The integration of narrative medicine currently faces structural barriers, including limited curricular space, the scarcity of standardized assessment tools, and insufficient faculty development. Future efforts should adopt implementation science frameworks to shift from isolated elective offerings toward longitudinal spiral curricula, develop multidimensional evaluation strategies, and explore the use of emerging technologies such as artificial intelligence and virtual reality in narrative pedagogy. These efforts may establish narrative medicine as a foundational pathway for cultivating physicians with core humanistic competencies.