Nightmares are a prevalent disorder with negative consequences. This study investigated the association between nightmares and daily distress. Fifty-six participants with frequent nightmares filled out questionnaires and a 10-day diary. The questionnaire concerned: sleep, nightmare distress, depression, neuroticism, posttraumatic stress, and anxiety; the diary: nightmares, sleep, and sleep related distress. Multilevel analyses revealed that nightmare nights, sleep quality, baseline nightmare distress, and depression were significantly associated with daily sleep related distress (P < 0.05). This is the first study that prospectively shows that nightmares are independently associated with daily sleep related distress.