To test that REM sleep and/or dreaming aid in the overnight regulation of negative mood, 60 student subjects, selected to have no current or past episodes of depression, were tested with the Profile of Mood States (POMS) before and after two nights of laboratory sleep. There was a significant overnight effect of sleep on the Depression scale (Dep) both on a sleep-through night and a night of REM awakenings for dream recall. Pre-sleep Dep was significantly correlated with the affect in the first REM report. Although Dep scores were truncated due to the screening criteria, a subgroup of the 10 highest scorers differed from the 50 low scorers in the distribution of dream affect categories across the night. Low scorers displayed a flat distribution of positive and negative affect in dreams, while those with some pre-sleep depressed mood showed a pattern of decreasing negative and increasing positive affect in dreams reported from successive REM periods. This suggests that dreaming may actively moderate mood overnight in normal subjects.