How does consciousness come about, and how can the brain create a world even when it is disconnected from the environment? Consciousness never fades when we are awake. However, when awakened from sleep, we sometimes recall dreams and sometimes recall no experiences. Traditionally, dreaming has been identified with rapid eye-movement (REM) sleep, characterized by wake-like, globally ‘activated’, high-frequency EEG activity. However, dreaming also occurs in non-REM (NREM) sleep, characterized by prominent low-frequency activity. Recent work using no-task, within-state paradigms has identified a ‘posterior hot zone’ where the EEG must be activated for subjects to experience dreams. Localized, content-specific activations occur depending on whether one dreams of faces, places, movement, and speech. These findings highlight the likely neural substrate of our own experiences and suggest some of the necessary and sufficient conditions for consciousness.