Dreams and hallucinations under sedation or anesthesia have been well known phenomena since the introduction of anesthesia. Sexual hallucinations may lead to allegations of sexual molestation or assault by medical doctors or professional nursing staff. Hallucinations under the influence of sedative or hypnotic drugs may be very vivid and as misinterpreted as being real and it is therefore often difficult to disprove the resulting false allegations. In this report the terms drug-induced dreams and hallucinations are defined and the probable mechanism described. By a historical review and case reports the medicolegal consequences are demonstrated and procedures recommended to avoid allegations of sexual assault.