The Dream Demons are a trio of powerful serpentine entities and characters from Freddy's Dead: The Final Nightmare. Little of the Dream Demons origin is revealed, their apparent and only motive seemingly being to find and empower the most twisted and depraved humans.[9]

The Dream Demons first appear in the film Freddy's Dead: The Final Nightmare, which reveals they are the beings that made Freddy the dream destroying maniac he is. When Freddy is killed by the mob of vigilantes after escaping justice for the crimes he did, the Dream Demons appear before him and offer him a deal - become an agent of theirs and be given vast amounts of power and become "forever". Freddy accepts the Dream Demon's offer and they fuse with him, giving him the ability to kill people in their dreams. Near the end of Freddy's Dead: The Final Nightmare, Freddy is dragged out from the dream world by his daughter, Maggie Burroughs, who blows him apart with a pipe bomb, which causes the Dream Demons to eject from his remains. As Freddy was not killed in the dream world, the Dream Demons are evidently unable to revive him, as they are implicated as having done after his "deaths" in previous films.[9]

The Dream Demons do not appear in Freddy vs. Jason, though Freddy still retains his dream powers.

Andy Mangels' script for the third issue of the cancelled comic series A Nightmare on Elm Street: The Beginning by Innovation Publishing offers more insight into the origin of the Dream Demons, revealing that when early creatures began to dream the energy of those dreams gathered together and created the Dream World and its inhabitants - Good Dreams, Nightmares and the Dream Demons, who left the Dream World for Earth, seeking to cause havoc there. The script also introduces their Hell-bound and repulsive queen and reveals that the Dream Demons' serpentine forms are not their true forms and that their real bodies are a "hideous amalgamation of human, insect, fish and alien