No Rules, Just 3 Things to Consider
When you’re writing fantasy, there are only two rules. The first rule: don’t do what other people do. The second rule: There are no rules.

There are only three things to consider:
1. Tropes
Fantasy is truly one of the most awesome genres because there are literally are no limits. In a fantasy, characters can travel through time, they can change faces, they can live in a castle or a hut in the woods or somewhere at the end of the universe. Fantasy makes great story-architecture. So, if you’re writing fantasy, read the frigging genre. Think of the current YA tropes: Another bunch of teens fighting the system, falling in love and whoops, there goes another love triangle. Try and be innovative. Lord knows, there’s plenty of scope.
Read as many myths and legends as you can get your grubby paws on. Don’t just read Greco-roman; you’ll broaden your repertoire significantly if you spread your mythic wings to include Pacifica, Aztec, Native American, Chinese, Celtic storylines. Another great thing about fantasy? You can nick these myths (sorry, adapt) and you won’t have to worry about copyright. (Unless you start to infringe upon Disney. Don’t go there. Seriously.)
If you’re borrowing another culture’s story legacy, be respectful and understand the nuances of the story before you begin pulling it apart.
Because fantasy is often based on mythic lore, it’s easy to hit your stride and walk straight into another unoriginal tale of elves and dwarves, so it does pay to be aware of the traditions before you start. Once you’re aware of the traditions, of course, rule two applies. Because once you really start to break the rules, you’re able to create a seriously funny work. Shrek did this well, as did Enchanted. Terry Pratchett is probably the ultimate trope-user. Check out the disc-world series.

2. World-building
Fantasy usually involves world building. This is the most complex and delightful part of writing fantasy and probably explains why some of the most successful fantasists (GRR Martin, Katharine Kerr) are Dungeon and Dragon fans.
When building a fantasy world, as JK Rowling says, you need to know the rules for that world. You may find yourself drawing maps and buildings, as Tolkien did, to help orientate yourself in your imaginary world.
Some writers like to plan the world in advance – maps, currencies, food, clothing, even (like Tolkien) complete languages. Others prefer to just write, and let the world develop around the character.
Either approach is okay – as I say, there are no rules – but if you’re developing the world as you go, you’ll probably need a proofreader to make sure you haven’t inadvertently contradicted your fictional world. (I just read an interesting post on Cornerfolds book blog about this very point, check it out if you’re interested in how readers feel about inaccuracies in books).
One tip: It makes it a little easier if you use reality as an anchor for your imagination. For example, in The SoulNecklace Stories, I based the Kingdom of the Rose on a real island (Anglesey, in North Wales). I did this partly because Anglesey’s Welsh name is Ynys Mon or Druid’s Island. I mean, how could I not use it!
I spent a lot of time looking at google maps and photos, and I visited Anglesey; this made it easier to describe everyday things like travel distances, directions, or the view from a window.
3. The M word.
Will you have magic in your world? Typically, fantasy does allow magic, although increasingly there’s a blur between technology and spells. The Name of the Wind, by Patrick Rothfuss, explores the technology behind magic; China Mieville has a steam-punk world named Bas-Lag in Perdido Street Station; Helen Lowe looks at what happens when one world’s culture meets another in her brilliant Wall of Night series.
A true fantasy novel describes the intersection between the known and the unknown. Because sometimes what looks like magic is actually technology – and who knows? Perhaps the opposite is also true, and what looks like technology is actually magic.
Extras
A short note: I’ve speckled links liberally through this post. Some lead to Wikipedia entries; others lead to Amazon links, so you can read the beautiful books set out here. One link leads to an fantastic Lord of the Rings interactive map. Check this out!
Or don’t. Like I say, there are no rules…