Folklore-based learning is a kind of situated learning paradigm in which students learn by solving problems embedded in a near-real situation. The proposed learning approach employs further interesting story plots from folklores as the background situation to motivate students to participate in learning activities. It is believed that such a paradigm has, on one hand, the advantages of helping students to learn in an authentic situation and, on the other, the provision of interesting story episodes as a stimulating agent for less initiated students. This article reports a folklore-based learning system based on the well-known Chinese folklore called "Tong Pak Fu and Chou Heung," and its effects on learning the subject of probability by a group of 454 Hong Kong secondary school students when compared with 3 teacher-guided methods. Results show that although no significant differences can be found among the different methods initially, when students with high pre-test scores were excluded the folklore-based learning group outperformed the other groups. Also, from student perception of the system it was found that the students prefer using this system to learn. Consider that no guidance on the subject matters was given to the students learning through this system, while students using the other methods were guided by experienced teachers, the results are very encouraging so that improvement and future developments to cover more topics are warranted. (Contains 9 tables and 8 figures.)