Fabled kingdom is lacking a capital (7)
I believe the answer is:
atlanta
'capital' is the definition.
(Atlanta is an example)
'fabled kingdom is lacking a' is the wordplay.
'fabled kingdom' becomes 'atlantis' (mythical lost kingdom).
'lacking' indicates named letters should be taken away.
'atlantis' with 'is' removed is 'atlant'.
'atlant'+'a'='ATLANTA'
(Other definitions for atlanta that I've seen before include "City plundered and burned by Sherman's army, 1864" , "American city" , "Maiden desperate to marry abandons a" , "Nineteen ninety six Olympic city" , "Capital city of Georgia, USA" .)