In the present paper, we present an argument and an initial model connecting research into the functional role of dreams with simulation theories. Traditionally, although theories that describe the refinement of simulations exist, the origin of these simulations is not considered in detail. Similarly, research into the functional role of dreams tends to focus on adults, with less regard to the dreams of young children. Here, we suggest that a functional role of dreams in infants through to early childhood may be the inception of these simulations. We show that the proposed model can present a unified explanation for functions of both the phenomenological experience of dreaming as well as other aspects of brain activity during sleeping, e.g. the processing of memories. Additionally, it explicitly provides an account for the development of simulations in early childhood, hypothesising that an initial function of dreams is the inception and development of simulations.