Start a dream journal. Every morning, as soon as you wake up and no later, write down your dream in as much detail as possible. Include as many sensory details as possible, particularly colors. Mark dreams that seem especially vivid or important.
Choose a favorite dream, one that is rich with detail and narrative. Wait several weeks so that you have many to choose from.
Draw several study sketches of your dream. These can be rough and quick, and they don't have to follow the dream precisely. The dream is supplying the inspiration, but you should not sacrifice narrative flow or visual interest for the sake of reproducing the dream exactly.
Choose the dream sketch that provides the most interesting visual narrative. This is what you will paint. Or, choose a series of sketches for paintings in a series.
Set up your painting easel in a quiet room where you'll be able to concentrate. The painting palette should be easy to access. Squeeze paint onto your palette and set up your paint thinner within reach. Place tarp on the ground if necessary. Draw your dream sketch onto the canvas. Begin to paint with thin layers of paint. The colors of paint should match the atmosphere of the original dream. If the dream was dark and frightening, the colors should also be dark and ominous. If the dream was hopeful and cheerful, the colors should be bright and vivid. If the dream has the quality of being a fuzzy memory, the colors should be muted and soft.
Paint details as you develop the painting. Switch to smaller and smaller paint brushes as the details become smaller and smaller themselves. Don't worry too much if the perspective is distorted or the figures seem inaccurate. This will emphasize the dreamy nature of the image.
Set the painting aside and allow it to dry. Don't look at the painting again for at least several hours, if not several days. When you return to the painting, you should be able to tell what changes need to be made or if the painting is finished to your satisfaction.