Emotions are a central part of our lives and the ability to effectively regulate them is central to well-being. Although a lot of research shows the beneficial role of sleep on emotional reactivity and regulation, little is known about how dream emotions relate to emotional reactivity and regulation. The current study investigated how dreams with high vs low levels of self-rated negative dream affect related to next-day waking emotional reactivity and regulation. Participants kept a home dream diary until reporting dreams on five days. They also reported dream and wake emotions and performed an online emotional reactivity and regulation task. Opposing predictions were derived from the continuity hypothesis and from the emotion regulation theories of dreaming. However, no significant differences were found between emotional reactivity and regulation on mornings following dreams with high vs low negative affect. Thus, no support was provided for the direct predictions made from the two theories. Nevertheless, morning wake affect differed significantly as a function of dream emotions. Specifically, participants reported significantly higher levels of positive emotions on mornings after a dream low, rather than high, in negative affect. Similarly, wake morning negative affect was higher following dreams high, rather than low, in negative affect. Thus, the results support a form of affective continuity between dreams and morning wakefulness.