Many sleep researchers have examined dream image-generation, which occurs during rapid eye movement (REM) sleep. Furthermore, activation of brain regions related to rapid eye movements during human REM sleep has been reported. Although recent brain imaging techniques have high spatial resolution, their temporal resolution is limited. Consequently, the spatio-temporal structures of brain activities related to rapid eye movement remain largely unknown. This article presents a short review of findings of recent studies that have used brain potentials related to rapid eye movement to examine dream image-generation processes. Brain potentials related to rapid eye movement are obtained using averaged electroencephalography (EEG) that is time-locked to the onset or offset of rapid eye movement. First, based on findings related to presaccadic and pre-REM brain potentials, we discuss why eyes move during REM sleep. Second, the relationship of lambdalike potentials, which occur immediately after the cessation of rapid eye movement, to generation of visual dream images, is discussed. Third, enhancement of gamma-band EEG activity occurring immediately after the offset of rapid eye movement is discussed in terms of information-binding of dream images. Finally in this review, preparatory activation of emotion and memory circuits before the onset of rapid eye movement is discussed in terms of contextual setting of the dream story.