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IN PART I of this paper (11), I have presented an extensive summary of much of the experimental work on sleep and dreaming of the past decade. Although it is impressive how well Freud's theory of dreaming can encompass many of the new empirical findings, it is obvious that some modification of theory is necessary. The most general statement that Freud made about the function of dreaming is taken from his last published comments about dreams (18): "We shall be taking all our observations into account if we say that every dream is an attempt to put aside a disturbance of sleep by means of wish-fulfillment. The dream is thus the guardian of sleep. This attempt can be more or less completely successful; it can also fail—in which case the sleeper wakes up, apparently aroused by the dream itself" (p. 57). Freud included four categories of stimuli or excitations as potential disturbers of sleep: (i) most important were the repressed wishes in the system Ucs., in the older terminology; the instinctual drives of the id pressing for discharge, in the new structural theory; (ii) preconscious day residues; (iii) stimuli impinging on the sense organs from the external world; (iv) internal somatic stimuli such as those arising from hunger, thirst, a full bladder, etc. He pointed out