Distressing life events precipitate disturbing dreams in several forms (e.g., nightmares, sleep terrors). Although research has focused on nightmares, some studies have differentiated three types of impactful dreams: nightmares, existential dreams, and transcendent dreams (Kuiken et al., 2006; Lee & Kuiken, 2015). In two studies, we examined whether contrasting forms of response to distressing life events (absence-related depression and absence-related melancholy) differentially predict these dream types. In an initial in-laboratory session, participants described their loss and trauma histories, and then, in an online session after awakening from an impactful dream, they completed an Impactful Dreams Questionnaire and a Post-Dream Questionnaire. Analyses of variance and structural equation models indicated that absence-related depression independently mediated the effects of loss, trauma, and traumatic loss on nightmare distress. In contrast, the interplay between absence-related melancholy and absence-related depression mediated the effects of loss, trauma, and traumatic loss on the features of existential dreams. These results suggest that dreamers’ response to nightmares resembles reparative regulation of intrusive memories, whereas their response to existential dreams resembles ambivalent reflection on poignant reminiscences. The basis for such reminiscences in existential (and perhaps transcendent) dreams is a level of metacognition that enables attunement to explicitly metaphoric relations between semantically “neighboring” dream representations.