Experimental evidence suggests that REM dreaming and daydreaming are related on a neuropsychological level. There is also suggestive experimental evidence that dreamlike mentation may serve to partly compensate for accumulated REM sleep "need". The present study tested the hypothesis that daydreaming may partly compensate for sleep deprivation in healthy individuals. Its "daydream induction" group was created to replicate a pilot study in which an instructional manipulation designed to prevent daydreaming paradoxically increased it. Specifically, it was hypothesized that participants assigned to the daydream induction group would report a larger number of narrative-related daydreams and show greater decreases in initial level of sleepiness (as positively indexed by the EEG theta percentage/alpha percentage ratio) than participants assigned to the control group. It was also hypothesized that participants who began the study relatively sleepy, regardless of group assignment, would have a greater need for any restorative aspect of daydreaming and would thus report more narrative-related daydreams and show larger sleepiness difference scores but smaller ending theta/alpha percentage ratios than participants who began the study in a relatively alert state. This hypothesis was partially supported in that participants who began the study relatively sleepy did in fact report more narrative-related daydreams than those who began the study in a relatively alert state. The prediction that initial level of sleepiness and sleepiness difference scores would correlate positively was also borne out by the data. While my initial finding of between-subject daydream induction was not replicated with a larger population sample, significant correlations between number of narrative-related daydreams reported and three measures of an encephalographic index of sleepiness were demonstrated. Qualitative within-subject daydream differences are discussed as a possible mechanism for a hypothesized sleepiness intensification effect.