The article reviews the process of Azerbaijani novel evolvement and formation through the history of epic thinking, poetic storytelling and narration. The author analyzes the form-content and theoretic – aesthetic characteristics of novel in classic Azerbaijani literature. The detailed analysis of “Munisname” work of Abubakr ibn Khosrov al-Ustad in the context of novel element is provided. The analysis revealed that there is common pattern in plots between “Munisname” and “Thousands nights and a night” as well as other folklore pieces and other examples of classic eastern art narratives. All in all such folk art samples as folktale, myth, fairytale, legend had a huge influence on the formation of epic genres of literature and especially on novels. In “Munisname” work of Abubakr it is possible to observe quite interesting patterns of improvisation. The author successfully combined classic prose traditions, folk imagination and narratives with epic written in poetic verse in one genre and thus created a new pattern of development for future written literature, forming modern prose story and novel by creating a completely new type of “name”.