The threat simulation theory of dreaming (TST) (Revonsuo, 2000) states that dream consciousness is essentially an ancient biological defence mechanism, evolutionarily selected for its capacity to repeatedly simulate threatening events. Threat simulation during dreaming rehearses the cognitive mechanisms required for efficient threat perception and threat avoidance, leading to increased probability of reproductive success during human evolution. One hypothesis drawn from TST is that real threatening events encountered by the individual during wakefulness should lead to an increased activation of the system, a threat simulation response, and therefore, to an increased frequency and severity of threatening events in dreams. Consequently, children who live in an environment in which their physical and psychological well-being is constantly threatened should have a highly activated dream production and threat simulation system, whereas children living in a safe environment that is relatively free of such threat cues should have a weakly activated system. We tested this hypothesis by analysing the content of dream reports from severely traumatized and less traumatized Kurdish children and ordinary, non-traumatized Finnish children. Our results give support for most of the predictions drawn from TST. The severely traumatized children reported a significantly greater number of dreams and their dreams included a higher number of threatening dream events. The dream threats of traumatized children were also more severe in nature than the threats of less traumatized or non-traumatized children. © 2003 Elsevier Inc. All rights reserved.