1. When Alice goes into the theater, there is a poster for 'Reefer Madness II: The True Story' (1985), New Line Cinema's first success, as well as one for 'Hairspray' (1988). In the background, another poster is visible, for Renny Harlin's 'Prison' (1988), which he made right before he did 'The Dream Master'.
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2. The two gravestones visible behind Kristen Parker's and Roland Kincaid's are for Donald & Nancy Thompson, characters from previous films.
3. The sandcastle form of the Elm Street House is visible on freeze-frame right before it explodes.
4. The name of the diner where Alice works is called the "Crave Inn", an homage to series creator Wes Craven.
5. Director Renny Harlin makes a cameo appearance in the film as a student in a classroom.
6. New Line Cinema CEO Robert Shaye makes his obligatory cameo in the film as a teacher lecturing Alice and fellow students on the philosophy on dreams. There is also another reference to him later in the film. When Dan and Kristen go to the hospital, there is an announcement on the PA requesting a Dr. Shaye.
7. 'The Dream Master' is the highest-grossing entry in the Elm Street film series (excluding Freddy Vs. Jason). It earned $49 million in the US.
8. Wes Craven and Bruce Wagner came up with a concept for this film that involved time travel through dreams. However, producers Robert Shaye and Sara Risher felt that this was too high a concept for an 'Elm Street' sequel and didn't think it fit the formula that Craven created with the first film.
9. According to casting director Annette Benson, over 600 actresses auditioned for the role of Alice. Among them was Ellie Cornell, who went on to play Rachel in 'Halloween 4' (1988) and 'Halloween 5' (1989).
10. Tibor Takács was offered to direct, but didn't take the job because of the grueling shooting schedule.
11. A magazine can be seen in Kristen's room that has a picture of Johnny Depp, who starred in the original 'Nightmare on Elm Street' film and had a brief cameo in 'Freddy's Dead'.
12. Patricia Arquette, who played Kristen in the third film, wanted to reprise her role but could not because she was pregnant at the time of filming.
13. Dr. Neil Gordon was not shown in 'The Dream Master' but returned in the comic book series.
14. Also on the background wall of the theatre entrance, there is a poster of Renny Harlin's previous movie 'Prison' (1988).
15. In the scene where Kristen is in the hospital after hitting her head, look closely. When the nurse changes into Freddy and he had the vials of blood in his right hand, one of the vials (the one closest to the camera) says 'Englund'- the last name of the actor who plays Freddy.
16. The scene where Alice and Rick are watching home videos was a last minute addition. In an interview with Andras Jones he stated that because of the writers strike and because of Renny Harlin's poor English, he and Lisa Wilcox wrote their own dialogue for it.
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