The present book is one of very few monographs in the world literature devoted to various aspects of children’s dreams. It reviews the extant literature on the topic, as well as provides the results of the author’s own research concerning children’s understanding of the sleep process and dream phenomenon. The book presents data from the literature and compares them with the results of the author’s own research. The findings obtained by the present author constitute a substantial contribution to modern psychological knowledge on the development of children’s thinking and their dreams. They demonstrate, for example, that it is possible to find out what children dream about without asking them directly, merely by talking about sleep in general. This approach can be useful when direct conversation with the child about their dreams is not possible. Apart from data on children’s knowledge about the process of sleep, the book also presents the basic facts on this process that are indispensable for understanding the relations between sleep and dreams. The book presents results of research on how children understand two related concepts: sleep and dream. The monograph presents not only analysis of dream reports but also colour drawings made by children to illustrate their dreams. Since this approach is not discussed in the literature, the author offers several suggestions on how to use drawings in the analysis of children’s dreams. The book discusses findings concerning the relations between children’s daytime experiences and their nocturnal dreams. Presented are, among others, relations between dreams and such traumatic events as illness, war or parental divorce. The analysis of children’s reports provided an answer to the question of development of knowledge concerning the nature and function of sleep during childhood.