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After briefly summarizing the findings of experimental sleep and dream studies, the author remarks that the psychoanalytic theory of dreams has remained essentially as Freud proposed it, based primarily on the topographic model. As far as he knows, there has not been any serious and systematic attempt to reformulate the theory on the basis of the structural model, the dual instinct theory, or ego psychology. Nor has it been confronted with recent experimental findings. He suggests it is high time to do both. The function of dreaming includes more than preserving sleep and attempting to fulfil infantile sexual wishes. During the REM phase man is most in contact with his inner world, and this periodic regression toward internal objects is as vital and indispensable as is contact with the external world. This has been demonstrated by the sensory deprivation experiments. Dreaming is a period during which we reprovision psychically and gain contact with our impulses through the imagery of the dream. Dreaming is not the protector of sleep, but both dreaming and sleeping permit the occurrence of organic and psychic phenomena which are indispensable to healthy mental functioning.