We investigated confusions of dreams and real events and the perceived and remembered qualities of the two types of experience. Studies 1 and 2 indicated that many people report occasional confusions of dreams and reality. In Study 3 diarists recorded brief descriptions of their dreamt and actual experiences over a 3-month period, and later classified the experiences and rated their qualities. There were few confusions of dreamt and real experiences, although independent raters sometimes could not distinguish them on the basis of the descriptions. The qualities of the memories for the two types of experience were often different and discriminant function analysis of these qualities classified the experiences rather well, although not as well as the diarists. Copyright © 2003 John Wiley & Sons, Ltd.