Recent research in the neurobiology of dreaming sleep provides new evidence for possible structural and functional substrates of formal aspects of the dream process. The data suggest that dreaming sleep is physiologically determined and shaped by a brain stem neuronal mechanism that can be modeled physiologically and mathematically. Formal features of the generator processes with strong implications for dream theory include periodicity and automaticity of forebrain activation, suggesting a preprogrammed neural basis for dream mentation in sleep; intense and sporadic activation of brain stem sensorimotor circuits including reticular, oculomotor, and vestibular neurons, possibly determining spatiotemporal aspects of dream imagery; and shifts in transmitter ratios, possibly accounting for dream amnesia. The authors suggest that the automatically activated forebrain synthesizes the dream by comparing information generated in specific brain stem circuits with information stored in memory.