We examined, first, what kind of dreams can protect children's mental health from impacts of war trauma, and, second, analyzed whether a psychosocial intervention (Teaching Recovery Techniques [TRT]) is effective in changing dream characteristics (e.g., bizarreness, emotional valence, and the dreamer's role) to be more beneficial or functional. Dream data of 257 Palestinian children (56.3% girls: 10-13-years) based on 14-night diaries was collected in the aftermath of a major war. Of these children 150 participated in the TRT and 107 were controls. They reported their posttraumatic stress (PTSD), depressive symptoms, and psychosocial well-being at baseline and 6 months follow-up. Principal component analyses revealed 3 dream dimensions: Unpleasant, Fragmented, and Lonely Dreams; Practical, Narrative, and Social Dreams; and Pleasant, Active, and Symbolic Dreams. Practical, Narrative, and Social Dreams could fill a protective function, as war trauma did not negatively impact psychosocial well-being among children who reported these dreams. The TRT was not able to increase more beneficial or reduce dysfunctional dream characteristics.