Story building is an important part of language and overall development of a child. Developing an interactive and artificial intelligence (AI) based solution to create stories for children is an open and challenging problem. Methods combining large language models (LLMs) and knowledge graphs (KGs) have further enabled high quality and coherent story generation. In this work, we present a platform, Story Yarn, developed for interactive story creation for children. We customise a KG, using children stories, which captures relationships between components of stories. This customised KG is then used along with LLM to collaboratively create a story. We have also built a simple app to facilitate user interaction. This platform can aid the creative development of children, and can be used at home or in schools.