An ongoing assumption made by sleep researchers is that since dreams are more often recalled on awakening from rapid eye movement (REM) sleep, dreams must occur more often during this stage of sleep. An alternative hypothesis is that cognition occurs throughout sleep, but the recall of this mentation differs on awakening. When a dream is not reported on awakening, there is no method of establishing whether it did not happen or was forgotten. The aim of the present study was to investigate this issue using an eye movement (EM) signal verification technique. Participants were instructed to produce an EM signal whenever they heard a tone. Tones were presented at increasing volume during Stage 2 and REM sleep until EM signal verification was observed. Ninety seconds after signal verification, participants were awakened and asked if they remembered hearing the tone or responding with the EM signal. Such recollection of signal verified tone (SVT) presentations was significantly less after Stage 2 sleep (65%) compared to REM sleep (100%) presentations. Furthermore, SVT recall was significantly correlated with reported dream recall frequency, suggesting the same processes involved in recalling SVTs might also underlie dream recall.