Lucid dreaming occurs in those who become aware they are dreaming, while still in the dreaming state. Although lucid dreaming has been studied with respect to personality characteristics and as a learned cognitive skill to enhance well-being via processes such as mindfulness, less research has been conducted on relationships between lucid dreaming and emotion. I collected self-reports from a college sample of 262 participants to examine the relationships between lucidity experienced in dreams and emotion regulation, dispositional positive emotions, interoceptive awareness, and mindfulness. Pearson correlations revealed that greater lucidity experienced within dreams was significantly related to more positive emotions, greater interoceptive awareness, and greater mindfulness; however, lucidity was not related to emotion regulation. Furthermore, regression analyses revealed that greater lucidity experienced within dreams predicted more dispositional positive emotions above and beyond emotion regulation and interoceptive awareness. It is important to note that these relationships were tested across people who self-identified as lucid dreamers as well as those who identified as non-lucid dreamers. Overall, lucidity may be beneficial for anyone who recalls his or her dreams, in that higher lucidity was associated with more positive affect during waking. Positive emotions experienced during waking also may translate into greater awareness during dreaming.