Affective experiences occur across the wake-sleep cycle—from active wakefulness to resting wakefulness (i.e., mind-wandering) to sleep (i.e., dreaming). Yet, we know little about the dynamics of affect across these states. We compared the affective ratings of waking, mind-wandering, and dream episodes. Results showed that mind-wandering was more positively valenced than dreaming, and that both mind-wandering and dreaming were more negatively valenced than active wakefulness. We also compared participants’ self-ratings of affect with external ratings of affect (i.e., analysis of affect in verbal reports). With self-ratings all episodes were predominated by positive affect. However, the affective valence of reports changed from positively valenced waking reports to affectively balanced mind-wandering reports to negatively valenced dream reports. These findings show that (1) the positivity bias characteristic to waking experiences decreases across the wake-sleep continuum, and (2) conclusions regarding affective experiences depend on whether self-ratings or verbal reports describing these experiences are analysed.