The possibilities for using folklore in studying history are directly dependent on the raised problem. In memories about the distant past, reality and fiction are often mixed up, which is why historians may regard the reliability of such stories as low. Still, such folklore shows what was valued, which events were felt to be significant and important. For historians, problems have been posed by the reliability and difficulties in dating the lore. In connection with the emergence of microhistory, more and more attention is being paid to how and what people thought, and it is often very difficult to find answers to this question in written sources. This article observes the possibilities for using historical tradition in the studies of agrarian and settlement history and, more specifically, five narrow topics that concern border markers, the emergence of villages, land use in farms, inheritance matters, and beggars. Oral tradition about the founding of villages and farms and their first settlers is in most cases connected with the periods of war and the plague, immigration of people, or some other extraordinary event. Descriptions of everyday life, which are abundantly found in folk memory, usually speak about well known and familiar things. At the same time, they considerably help to broaden notions of the past and enable to find out the peasants’ attitudes towards and evaluations of one or another event or phenomenon. As a result of taking folklore into consideration, the picture of history becomes much more differentiated and colourful. The folklore that has been observed in this article is closely connected with the village society, and it primarily reveals notions connected with the farm people’s everyday life. Archive sources usually disclose them from quite a different point of view. As a result of the analysis, we have reached the conclusion that the best results are achieved when historical tradition is taken into account for relatively recent events, those that have happened since the second half of the 19th century, and under circumstances in which spatial relationships have not considerably changed. The use of earlier lore is more complicated, although it also enables us to see people’s attitudes, which gives a ‘soul’ to the discussed phenomena. The biggest difference is that archive materials, naturally, do not reflect the reasons hidden in the peasants’ mental world. Namely, this is why the use of folklore enables to provide important extra material for studying settlement and agrarian history, which supplements a rational picture about past events and processes, and enables to open up deeper backgrounds to what happened.