Although emotions are reported in a large majority of dreams, little is known about the factors that account for night-to-night and person-to-person variations in people's experience of dream affect. We investigated the relationship between waking trait and state variables and dream affect by testing multilevel models intended to predict the affective valence of people's everyday dreams. Participants from the general population completed measures of personality and trauma history followed by a three-week daily journal in which they noted dream recall, valence of dreamed emotions and level of perceived stress for the day as well as prior to sleep onset. Within-subject effects accounted for most of the explained variance in the reported valence of dream affect. Trait anxiety was the only variable that significantly predicted dream emotional valence at the between-subjects level. In addition to highlighting the need for more fine-grained measures in this area of research, our results point to methodological limitations and biases associated with retrospective estimates of general dream affect and bring into focus state variables that may best explain observed within-subject variance in emotions experienced in everyday dreams.