Various statements throughout the Babylonian and Palestinian Talmuds with reference to dreams, their nature, validity, and analysis are explicated in terms of modern understandings and theories of dream psychology. Contrary to the more unsystematic categorizations of some earlier writers on the topic, the data, when carefully analyzed, imply a highly advanced conception of dreamwork. Such notions as wish-fulfillment, distortions, repression of threatening material and some salient features of commonly accepted dream-analysis theory are found to be anticipated by the rabbis of the Talmud. The Talmud is also shown to have a more eclectic view of the reality of dreams as opposed to older, more mythologized and spiritual views.