Converging evidence suggests that dreaming is influenced by the consolidation of memory during sleep. Following encoding, recently formed memory traces are gradually stabilized and reorganized into a more permanent form of long-term storage. Sleep provides an optimal neurophysiological state to facilitate this process, allowing memory networks to be repeatedly reactivated in the absence of new sensory input. The process of memory reactivation and consolidation in the sleeping brain appears to influence conscious experience during sleep, contributing to dream content recalled on awakening. This article outlines several lines of evidence in support of this hypothesis, and responds to some common objections.