- “Miserable cursed Skylanders! And after all I was doing for Skylands. I mean - who doesn't need a little extra sleep. HAHAHA!”
- —Dream Sheep
The Dream Sheep is ill-tempered, easily irritated towards the Sleep Dragon's dull personality. He thinks highly of himself and has a near-irrational hatred for the Mabu, constantly using them or objects in their likeness in Villain Bootcamps to be harassed or destroyed and stopping at every opportunity to speak ill of them.
The Dream Sheep doesn't have any attacks and completely relies on the Sleep Dragon to do the fighting for him. When captured, he can breathe out a blast of nightmare energy that stuns enemies.
The Dream Sheep along with his legion of Nightmare Villains were inadvertantly released from the Realm of Dreams by Hugo, who opened a cursed book that contained a portal to the dream realm. Having put the King of Sleep, the Sleep Dragon, under his control, the evil sheep concocted a spell that threatened to put all of Skylands to sleep, allowing the Dream Sheep and his army of nightmares to take over. The Skylanders were immune to the spell and are the only ones capable of stopping the Dream Sheep.
The Dream Sheep and the Sleep Dragon confronted the Skylanders at each Temple of Waking to prevent them from ringing the Bells of Waking to wake all of Skylands. However the two villains failed in their attempts, and Skylands was awakened from the sleep curse. The Dream Sheep vowed revenge and retreated to the Realm of Dreams, knowing that the inhabitants of Skylands would eventually fall asleep. When they do, the villain would be able to place a nightmare all of Skylands would never wake up from.
Once back in the Nightmare Realm, the Sages of Waking were imprisoned by the Dream Sheep to prevent them from stopping his nightmarish plan. However he did not count on the redeemed Nightmare Villains in freeing the Sages, and the Sleep Dragon helping the Skylanders when the dragon misunderstood an order to 'take care of the Skylanders' should they try to stop the Dream Sheep. After engaging the Skylanders in one final battle, the Dream Sheep was defeated and captured, freeing the Sleep Dragon and the Realm of Dreams.
- The Dream Sheep is the only Nightmare Villain who doesn't have his own Nightmare Pages.
- He is the only nightmare villain where you can win two Skystones from (one is his own and the other is the Sleep Dragon).
- His and the Sleep Dragon are the only Nightmare Villains whose Skystones don't have the protective end.
- Unlike other sheep, he has a long tail.
- He and Sheep Creep are the only known sheep to have colored irises within their eyes while most of the other sheep don't.
- He is the final 3DS exclusive main antagonist in the series.