When he was 19 years old, Alex had been the prime subject of a scientific research project documenting his psychic ability but, in the midst of the study, he disappeared.

Novotny, aided by fellow scientist Dr. Jane DeVries, has developed a technique that allows psychics to voluntarily link with the minds of others by projecting themselves into the subconscious during REM sleep.

Novotny equates the original idea for the dreamscape project to the practice of the Senoi natives of Malaysia, who believe the dream world is just as real as reality.

The project was intended for clinical use to diagnose and treat sleep disorders, particularly nightmares; but it has been hijacked by Bob Blair, a powerful government agent.

Blair assigns Tommy Ray Glatman, a mentally unstable psychic who murdered his own father, to enter the president's nightmare and assassinate him.

He makes a deal with them to call five winners at the racetrack, in exchange for their distracting Blair's goons as he escapes back to the institution, with Jane letting him sneak in.

Jane and Alex later board a train to Louisville, Kentucky, intent on making their previous dream encounter a reality.

According to author Roger Zelazny, the film developed from an initial outline that he wrote in 1981, based in part upon his novella "He Who Shapes" and 1966 novel The Dream Master.