Rapid eye movement (REM) sleep is suggested to play a role in the storage of memory, resolution of emotional experiences, and erasure of memory (forgetting). Plasticity of hippocampal physiology, morphology, and chemistry seems to be evidence for new memory formation. REM sleep, melatonin, and monoamines may be involved in the transfer of memory from the intermediate-term high-capacity buffer in the hippocampus into long-term memory storage in the neocortex. Vasotocin, which is released by melatonin, could be an amnestic agent that erases recent memory from the hippocampal-entorhinal complex during dreams.