Dreams following trauma have been suggested to aid emotional adaptation, yet trauma-related nightmares are a diagnostic symptom of Posttraumatic Stress Disorder (PTSD). There is little published data relating dreams to PTSD soon after trauma. We assessed dreams and PTSD in 60 injured patients after life-threatening events and obtained follow-up assessments in 39 of these participants 6 weeks later. Ten of 21 dream reports from morning diaries were rated and described as similar to the recent traumatic event. The participants reporting these distressing “trauma dreams” had more severe concurrent PTSD symptoms than those reporting other categories of dreams and had more severe initial and follow-up PTSD than those without dream recall. These findings along with our preliminary longitudinal observations relating changes in dream patterns to outcome, suggest a relationship of dream characteristics and early adaptive versus maladaptive patterns of processing traumatic memory.