Study Objectives: To examine associations between specific parasomnias and psychotic experiences in childhood. Design: Birth cohort study. Information on the presence of frequent nightmares in children was obtained prospectively from mothers during multiple assessments conducted when children were aged between 2.5 and 9 y. Children were interviewed at age 12 y about nightmares, night terrors, sleepwalking, and psychotic experiences (delusions, hallucinations, and thought interference) occurring in the previous 6 mo. Setting: Assessments were completed in participants’ homes or a University clinic within the UK. Patients or Participants: There were 6,796 children (3,462 girls, 50.9%) who completed the psychotic experiences interview. Measurements and Results: Children who were reported by their mothers as experiencing frequent nightmares between 2.5 and 9 y of age were more likely to report psychotic experiences at age 12 y, regardless of sex, family adversity, emotional or behavioral problems, IQ and potential neurological problems (odds ratio (OR) = 1.16, [95% confidence intervals (CI) = 1.00, 1.35], P = 0.049). Children reporting any of the parasomnias at age 12 y also had higher rates of concurrent psychotic experiences than those without such sleeping problems, when adjusting for all confounders (OR = 3.62 [95% CI = 2.57, 5.11], P < 0.001). Difficulty getting to sleep and night waking were not found to be associated with psychotic experiences at age 12 y when controlling for confounders. Conclusion: Nightmares and night terrors, but not other sleeping problems, in childhood were associated with psychotic experiences at age 12 years. These findings tentatively suggest that arousal and rapid eye movement forms of sleep disorder might be early indicators of susceptibility to psychotic experiences.