The hypothesis that there is a strict relationship between dreams and a specific rapid eye movement (REM) sleep mechanism is controversial. Many researchers have recently denied this relationship, yet none of their studies have simultaneously controlled both sleep length and depth prior to non-REM (NREM) and REM sleep awakenings, due to the natural rigid order of the NREM–REM sleep cycle. The failure to control sleep length and depth prior to arousal has confounded interpretations of the REM-dreams relationship. We have hypothesised that different physiological mechanisms underlie dreaming during REM and NREM sleep, based on recent findings concerning the specificity of REM sleep for cognitive function. Using the Sleep Interruption Technique, we elicited sleep onset REM periods (SOREMP) from 13 normal subjects to collect SOREMP and sleep onset NREM (NREMP) dreams without the confounds described above. Regression analyses showed that SOREMP dream occurrences were significantly related to the amount of REM sleep, while NREMP dream occurrences were related to arousals from NREM sleep. Dream properties evaluated using the Dream Property Scale showed qualitative differences between SOREMP and NREMP dream reports. These results support our hypothesis and we have concluded that although ‘dreaming’ may occur during both REM and NREM periods as previous researchers have suggested, the dreams obtained from these distinct periods differ significantly in their quantitative and qualitative aspects and are likely to be produced by different mechanisms.