The discovery of the close association between rapid eye movement (REM) sleep and dreaming and development of sleep laboratory techniques ushered in a new era in the study of dreams. For the first time, direct and systematic investigation could be made of such topics as the occurrence, qualities, recollection, and childhood development of dreaming. Experimental methodologies permitted investigation of the responsiveness of dreams to external stimulation and the effects of deprivation of REM sleep. Much effort was devoted to searching for parallels between physiological aspects of REM sleep and characteristics of associated dreams, with modest results. The leading theory of dreaming in the early decades of this research was the psychoanalytic, which views dreams as highly meaningful reflections of unconscious mental functioning. With developments in understanding of the neurophysiology of REM sleep, new theories of dreaming were proposed. The most prominent, the activation-synthesis hypothesis, derived its view of dreaming directly from the neurophysiology of REM sleep, in particular the role of the brain stem, and in its original form regarded dreams as not essentially meaningful. Further developments in neurobiological research, including lesion and brain imaging studies, have established a clearer view of the functional neuroanatomy of REM sleep and dreaming. To what degree, and in what way, implications can be drawn from these findings for the psychology of dreaming is controversial. Some more recent theories of dreaming emphasize an adaptive function related to emotion and a role in learning and memory consolidation.KEYWORDS: Dreams, REM sleep, psychology, neurophysiology, psychoanalysis, activation-synthesis Objectives: On completion of this article, the reader will be able to develop a better understanding of the neurophysiology of dreaming, and the controversies about the psychology of dreams. Accreditation: The Indiana University School of Medicine is accredited by the Accreditation Council for Continuing Medical Education to provide continuing medical education for physicians. Credit: The Indiana University School of Medicine designates this educational activity for a maximum of 1 Category 1 credit toward the AMA Physicians Recognition Award. Each physician should claim only those hours of credit that he/she actually spent in the educational activity. Disclosure: Statement has been obtained regarding the author's relationships with financial supporters of this activity, use of trade names, investigational products, and unlabeled uses that are discussed in the article. The author has nothing to disclose.The discovery of rapid eye movement (REM) sleep and its close association with dreaming, 1 and the subsequent elaboration of the non-REM (NREM)/ REM sleep cycle, 2 ushered in a new era in the study of dreams. The link between dreaming and a specific, universal, and regularly occurring stage of sleep permitted direct and systematic investigation of a range of questions and topics that had previousl...