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Summary Nightmares can be defined as very disturbing dreams, the events or emotions of which cause the dreamer to wake up. In contrast, unpleasant dreams can be defined in terms of a negative emotional rating of a dream, irrespective of whether or not the emotions or events of the dream woke the dreamer. This study addresses whether frequency of unpleasant dreams is a better index of low well-being than is frequency of nightmares. A total of 147 participants reported their nightmare frequency retrospectively and then kept a log of all dreams, including nightmares, for 2 weeks, and rated each dream for pleasantness/unpleasantness. Anxiety, depression, neuroticism, and acute stress were found to be associated with nightmare distress (ND) (the trait-like general level of distress in waking-life caused by having nightmares) and prospective frequency of unpleasant dreams, and less so with the mean emotional tone of all dreams, or retrospective or prospective nightmare frequency. Correlations between low well-being and retrospective nightmare frequency became insignificant when trait ND was controlled for, but correlations with prospective unpleasant dream frequency were maintained. The reporting of nightmares may thus be confounded and modulated by trait ND: such confounding does not occur for the reporting of unpleasant dreams in general. Thus there may be attributional components to deciding that one has been awoken by a dream, which can affect estimated nightmare frequency and its relationship with well-being. Underestimation of nightmare frequency by the retrospective questionnaire compared with logs was found to be a function of mean dream unpleasantness and ND.