Incorporation of details from waking life events into Rapid Eye Movement (REM) sleep dreams has been found to be highest on the night after, and then 5–7 nights after events (termed, respectively, the day-residue and dream-lag effects). In experiment 1, 44 participants kept a daily log for 10 days, reporting major daily activities (MDAs), personally significant events (PSEs), and major concerns (MCs). Dream reports were collected from REM and Slow Wave Sleep (SWS) in the laboratory, or from REM sleep at home. The dream-lag effect was found for the incorporation of PSEs into REM dreams collected at home, but not for MDAs or MCs. No dream-lag effect was found for SWS dreams, or for REM dreams collected in the lab after SWS awakenings earlier in the night. In experiment 2, the 44 participants recorded reports of their spontaneously recalled home dreams over the 10 nights following the instrumental awakenings night, which thus acted as a controlled stimulus with two salience levels, high (sleep lab) and low (home awakenings). The dream-lag effect was found for the incorporation into home dreams of references to the experience of being in the sleep laboratory, but only for participants who had reported concerns beforehand about being in the sleep laboratory. The delayed incorporation of events from daily life into dreams has been proposed to reflect REM sleep-dependent memory consolidation. However, an alternative emotion processing or emotional impact of events account, distinct from memory consolidation, is supported by the finding that SWS dreams do not evidence the dream-lag effect.