There have been numerous reports in the literature on the descriptive similarities between a severe nightmare and an acute psychotic episode. Nightmares may be a prelude to psychotic decompensation, and it has been suggested that frequent lifelong nightmares may even be diagnostic of an underlying vulnerability to psychosis. In this report, we present a case study of a 40-year old female experiencing chronic paranoid schizophrenia, whose two witnessed psychotic relapses in the hospital were immediately preceded by intense and vivid nightmare attacks. Significantly, the content of these nocturnal dreams was thematically consistent with her waking hallucinations, suggesting a direct continuity between these experiences. We propose that further systematic study of the dreams and nightmares of individuals diagnosed with schizophrenia may be particularly useful in understanding their phenomenological experience.