A fractured fairy tale rearranges traditional fairy tale elements into new stories with updated themes. The Princess Bride, a classic book and movie, is an example of a fractured fairy tale. A fairy tale parody also takes traditional fairy tale elements and rearranges them into a new story, but does so while poking fun at the fairy tale genre. Shrek, the popular movie, can be seen as a fairy tale parody.
Take a classic fairy tale, and write it from the villain's point of view. Every character has a story. Before she was shoved into an oven, what was the witch in Hansel and Gretel thinking? Did she have a reason for wanting to eat the two children? When Gregory Maguire wrote his now famous novel Wicked, he wanted to know what the Wicked Witch's story was in The Wizard of Oz.
What happens after the heroine marries the prince, after the dragon's been slain, after the kingdom's been saved? Try writing a sequel to a traditional fairy tale to explore what happens after the happily ever after. Examples of fairy tale sequels include Michelle Davidson Argyle's Cinderella sequel Cinders or the sequels to Shrek.
Take a traditional fairy tale, and set it in an interesting historical period or in the present day. You can set it anywhere in the world! Disney used this method for its 2009 film "The Princess and the Frog." Taking the traditional fairy tale of this title, they set it in New Orleans during the Jazz Age. This gave the traditional tale a new and unique atmosphere.