The study and treatment of psychosis have long been marked by clinical complexity, theoretical debate, and evolving paradigms of care. While biological and pharmacological approaches have dominated much of the discourse over the past century, the role of psychotherapy in treating psychosis has historically received comparatively limited attention. However, a growing body of clinical scholarship supports the therapeutic potential of relational and psychodynamically informed approaches. Early pioneers of psychotherapy for psychosis, including Harold Searles and Frieda Fromm-Reichmann, emphasized the centrality of attunement, sustained presence, co-regulation, and relational engagement in working with altered states of consciousness. Their work suggests that the mental operations characteristic of psychotic experience share meaningful similarities with dream processes, including symbolic condensation, affective intensification, and shifts in ego boundaries. This presentation explores psychosis as a form of waking dream state and examines how psychotherapy can facilitate the co-creation and exploration of these altered states of consciousness within the therapeutic relationship. By approaching psychotic phenomena as meaningful experiential processes rather than solely as symptoms to be eliminated, clinicians may gain deeper access to the subjective logic organizing the experience.