"sequence of sensations or images passing through the mind of a sleeping person," mid-13c., probably related to Old Norse draumr, Danish drøm, Swedish dröm, Old Saxon drom "merriment, noise," Old Frisian dram "dream," Dutch droom, Old High German troum, German Traum "dream." These all are perhaps from a Proto-Germanic *draugmas "deception, illusion, phantasm" (source also of Old Saxon bidriogan, Old High German triogan, German trügen "to deceive, delude," Old Norse draugr "ghost, apparition"). Possible cognates outside Germanic are Sanskrit druh- "seek to harm, injure," Avestan druz- "lie, deceive."

Old English dream meant "joy, mirth, noisy merriment," also "music." Much study has failed to prove that Old English dream is the source of the modern word for "sleeping vision," despite being identical in form. Perhaps the meaning of the word changed dramatically, or "vision" was an unrecorded secondary Old English meaning of dream, or there are two words here.

OED (1989) offers this theory for the absence of dream in the modern sense in the record of Old English: "It seems as if the presence of dream 'joy, mirth, music,' had caused dream 'dream' to be avoided, at least in literature, and swefn, lit. 'sleep,' to be substituted ...."

The dream that meant "joy, mirth, music" faded out of use after early Middle English. According to Middle English Compendium, the replacement of swefn (Middle English swevn) by dream in the sense "sleeping vision" occurs earliest and is most frequent in the East Midlands and the North of England, where Scandinavian influence was strongest.

Dream in the sense of "that which is presented to the mind by the imaginative faculty, though not in sleep" is from 1580s. The meaning "ideal or aspiration" is from 1931, from the earlier sense of "something of dream-like beauty or charm" (1888). The notion of "ideal" is behind dream girl (1850), etc.

Before it meant "sleeping vision" Old English swefn meant "sleep," as did a great many Indo-European "dream" nouns originally, such as Lithuanian sapnas, Old Church Slavonic sunu, and the Romanic words (French songe, Spanish sueño, Italian sogno all from Latin somnium). All of these (including Old English swefn) are from PIE *swep-no-, which also is the source of Greek hypnos (from PIE root *swep- "to sleep"). Old English also had mæting in the "sleeping vision" sense.

You are not wrong, who deem

That my days have been a dream;

Yet if hope has flown away

In a night, or in a day,

In a vision, or in none,

Is it therefore the less gone? 

All that we see or seem

Is but a dream within a dream.

[Poe, from "A Dream Within a Dream"]

mid-13c., dremen, "to have a dream or dreams, be partly and confusedly aware of images and thoughts during sleep," from dream (n.). Transitive sense of "see in a dream" is from c. 1300. Sense of "think about idly, vainly, or fancifully; give way to visionary expectation" is from late 14c. Related: Dreamed; dreaming. To dream up "picture (something) in one's mind" is by 1941.

In the older sense of "sing, rejoice, play music," it is from Old English drēman (Anglian); dryman (West Saxon), from the Old English noun. This was obsolete from c. 1300.

also daydream, "a reverie, pleasant and visionary fancy indulged in when awake," 1680s, from day + dream (n.). As a verb, attested from 1820. Related: Day-dreamer; day-dreaming. Daymare "feeling resembling a nightmare experienced while awake" is from 1737.

coined 1931 by James Truslow Adams (1878-1949), U.S. writer and popular historian (unrelated to the Massachusetts Adamses), in "Epic of America."

[The American Dream is] that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position. [Adams]

Others have used the term as they will.

the sort of improbable fantasy one has while smoking opium, 1870, from pipe (n.1) in the smoking sense + dream (n.). Old English pipdream meant "piping," from dream in the sense of "music."

"world of dreams or illusions," 1817, from dream (n.) + world.

1560s, "full of dreams," hence "associated with dreams," from dream (n.) + -y (2). Sense of "dream-like, vague, indistinct" is by 1848. Meaning "perfect, ideal," is noted as a teen vogue word in 1941, American English teen slang. Compare dreamboat "romantically desirable person;" dream girl, etc. Related: Dreamily; dreaminess.

"romantically desirable person," 1947, from dream (n.) + boat (n.). The phrase was in use about two decades before that. "When My Dream Boat Comes Home" was the title of a 1936 song credited to Guy Lombardo and "Dream Boat" was the title of a 1929 book.

It is rare indeed that a designer ever has the opportunity to build his dream boat. Chris Smith, all his life, had held in mind a boat of about fifty feet overall which would be the last word in yacht design and performance. [Motor Boating, December 1929]

alternative past tense and past participle of dream (v.).

"landscape seen in dreams," 1858, from dream (n.) + second element abstracted from landscape, etc.