Gholam Hussein Sa'edi is one of the greatest Iranian writers of short stories in the present era. Sa'edi's stories are based on the existence of fanciful and dreamlike settings in which he attempts to establish the endings of the stories to be the direct result of the characters' psychological reaction against their dreams. The linguistic and psychological analyses of the stories show that dreams have an essential part to play in his short stories, and that fanciful atmosphere, place, time setting, and psychotic characters create a context for the existence of dreams. In this study, dreams have been studied in his short stories on the basis of Freud's and Jung's ideas. In Sa'edi's collection of "The Mourners of Bayal," dreams are formed when psychotic characters react to archetypes, and the archetypes are specified through the analysis of the dreams when identifying the characters of the stories and their mental action. However, in his story of "Two Brothers" and "The Beggar" in the collection of "Anonymous Fears," dream is the centerpiece of fictional events, and the events of the story coincide with the dream of the characters.