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The depersonalizing and personalizing processes, the result of deeper and lighter sleep in dreams respectively, are reviewed in the light of their relation to the ego functions of reality sensing and reality testing. When sleep lightens prematurely prior to actual awakening the dream images may seem quite 'real' and cause the dreamer to wish to regress into deeper sleep. The depth of sleep as revealed in dreams alters the relation of the body ego to the body itself. If the sequence of depersonalization-personalization processes leading to awakening from dreams are not properly synthesized, 'real' dreams may be carried over into waking life as delusions. On the basis of the theory of dream image formation it is assumed that premature cathexis of an incomplete body ego in the dream leads to a primary hypochondriacal delusion, which seems real and forms the basis for other more complex delusions.
Examples of failure of synthesis in this sequence are given from temporal lobe epilepsy patients who have very 'real' dreams and who are especially prone to develop a schizophreniform type of psychosis. Consideration is given to the daytime conditions which allowed for success or failure of the depersonalizing process in the dreams of a patient with reactive depression. Finally, some speculations are offered regarding failure of the depersonalizing process as a factor in the development of psychosomatic disease.