In this paper I develop the thesis that dreams are essential to an understanding of waking consciousness. In the first part I argue in opposition to the philosophers Malcolm and Dennett that empirical evidence now shows dreams to be real conscious experiences. In the second part, three questions concerning consciousness research are addressed. (1) How do we isolate the system to be explained (consciousness) from other systems? (2) How do we describe the system thus isolated? (3) How do we reveal (...) the mechanisms on which this system is based? I suggest that empirical dream research combined with other empirical approaches can help us to sketch answers to all of these questions. I argue that the subjective form of dreams reveals the subjective, macro-level form of consciousness in general and that both dreams and the everyday phenomenal world may be thought of as constructed “virtual realities”. A major task for empirical consciousness research is to find out the mechanisms which bind this experienced world into a coherent whole. (shrink)