Read with emotion. You will easily grab the attention of your little listeners no matter their age when you as the narrator bring the book to life. Let some personality and inflection into your voice. Create voices for each character that match their general description, and engage your audience using facial expressions and eye contact. Don't hesitate to ask your audience questions, either. If your main character is being chased by a swarm of miniature dragons, ask your audience what they would do in that situation. The more animated you read, the more excited your audience will be to listen.
Act it out when reading to young children, generally those five and under, as they tend to have shorter attention spans than their older counterparts. They need constant stimulation to stay entertained, and for some children, listening to you read emphatically may not be enough. Act out the book during storytime, using your entire body as a prop. Make elephant noises, roar like a lion, or use your hand to peck like a chicken.
Give everyone a part when reading to older children, who will look at you oddly if you're running about the room flapping your arms and making strange animal noises. However, they will still appreciate your reading with emotion all the same. To keep your older audience further enamored of story time, divide the book into parts. Lead as the narrator, and let each child read a certain character's part.
Dress the part. Getting children involved in story time is essential to making it more fun, and children love dressing up as their favorite characters. Have each child dress as a character from one of their favorite books. Take turns guessing which character comes from which book and then read the corresponding story.