Abstract:A psychophysiological hypothesis of the dream process during REM sleep called “a sensory image‐free association hypothesis” is proposed. It is assumed that a state with a sustained EEG pattern of drowsiness (non‐REM stage‐1) and muscle atonia produces a stream of disorganized and vague thinking as a background mentation during the REM sleep. The phasic excitation of the brain occurring concurrently with the burst of rapid eye movements (REMs) activates the hippocampal‐neocortical memory system and draws out sensory images from the memory reservoir of the brain. The dreamer makes a freely organized association about the successive sensory images and makes up a dream story. This hypothesis is compatible not only with the recent neurophysiological findings but also with traditional psychological interpretation of the dr